Fitch Ratings said yesterday that its downgrade of Bermuda’s credit rating — announced last Friday — does not currently impact Fitch’s ratings of Bermuda-domiciled insurance companies.

The Island’s international re/insurers are seen as “being highly isolated from country-related risks in Bermuda”, the credit rating agency said.

Fitch cuts its rating on Bermuda Government bonds to A+ from AA-, citing a fifth consecutive year of economic contraction, continued fiscal deficits, and a rising government debt burden.

However the outlook on the rating was raised to stable from negative, based on Fitch’s expectation that Bermuda’s economic growth will gain pace and that the authorities’ commitment to a reduction in the fiscal deficit will be sustained in 2014-2016.

Fitch said the Bermuda re/insurers it rated were generally strong international organisations, with a large and diverse global profile.

“These companies’ assets, insurance premiums and underwriting exposures are spread across many countries, with very little originating in Bermuda,” Fitch commented.

“Bermuda-based insurers tend to hold very little if any Bermuda sovereign debt or Bermuda currency. They also maintain relatively minor investments in Bermuda banks and other Bermuda-based companies. While most Bermuda insurers have some level of deposits held at Bermuda banks, these amounts are generally quite limited.

“In addition, investment custodians are typically located outside of Bermuda. As a result of this very limited linkage of Bermuda-based (re)insurers to the Island’s fiscal issues and local economy, Fitch believes stress experienced by Bermuda would have minimal impact on the credit quality of its (re) insurers.”

Fitch noted that several insurance groups had ratings equivalent to or higher than Bermuda’s A+.

These include operating and holding company ratings for PartnerRe and operating company ratings for Ace, Allied World Assurance Company, Arch Capital Group Ltd, Axis Capital Holdings, Everest Re and RenaissanceRe.

“Fitch would not expect to lower any of these ratings in the event that Bermuda’s LC sovereign rating was downgraded up to at least an additional two notches to ‘A-’,” the rating agency added.