The financial strength ratings of Oil Insurance Ltd., a Bermuda mutual insurer, continue to be on rating agency Standard&Poor?s watch for a possible downgrade, while sister company Oil Casualty Insurance Ltd. has had its ratings affirmed.

A report last week mistakenly reported Oil Casualty?s ratings affirmation as having gone to Oil Insurance. The latter?s financial strength rating was downgraded two notches after Katrina to ?A-? (negative).

While OIL remains on negative watch, signalling a downgrade to its financial strength rating has not been ruled out, Oil Casualty Insurance (OCIL) has had its ?A-? rating affirmed by Standard&Poor?s and marked down as ?stable? indicating the rating is unlikely to change.

?This decision [by S&P] is due to more clarity regarding notice activity and exposure review arising from hurricanes Katrina, Rita and Wilma,? OCIL said in a statement.

OCIL said S&P also took into account its efforts to manage risk exposure and ?strong capital position? when affirming its rating. The company said it controls its exposure to losses by buying secured reinsurance.

S&P?s rating actions on Oil followed the ratings agency?s concerns about the losses OIL members could sustain from hurricanes Katrina and Rita ? two powerful storms that hit the Gulf Coast region. Some of the energy companies that make up OIL?s member base of more than 80 companies operate oil rigs and other equipment in the Gulf of Mexico.

On September 27, OIL said it was setting aside loss reserves for Katrina, the devastating August 29 that battered the region, of $1 billion.

This is the maximum amount that OIL can pay out for any one event.

The reserves were set aside for potential claims. As well the rates charged for 2005 premiums were adjusted higher meaning OIL will take in more money from its members.

The way the company is formed, its members must pay back losses over a five-year period, on an interest-free basis.

OIL has also booked reserves of $296 million related to Hurricane Rita. ?The full extent of the damage will not be known for many months,? OIL said, of Rita.