CBL Corp is expecting a credit rating downgrade as it seeks to raise cash to deal with a mandated increase to its reserves from the Reserve Bank of New Zealand and Central Bank of Ireland.
The announcement comes after CBL's statement on Monday that it planned to raise capital after posting a full-year loss of between $75 million and $85m that reflected an increase in future claims reserve and write-off of receivables for its French construction insurance business.
Today, CBL said it expects a downgrade to its A- financial strength rating and issuer credit rating from ratings agency A.M. Best, "which will be announced once notice has been received". It would update the market soon on its proposed capital raising. Its stock is halted from trading.
In the Monday statement, the company said the reserves adjustment came after its originating insurer, Elite Insurance Co, went into what is known as "solvent run-off" in July 2017.
It said that the RBNZ had commissioned an independent report into the adequacy of its reserving for the French construction insurance business.