NEW YORK (Reuters) ? Standard & Poor?s has said it is concerned Bermuda-based financial guaranty reinsurer Channel Reinsurance Ltd. may have too few employees relative to the size of its portfolio and cut its outlook on the reinsurer?s debt rating to negative.

Channel Re has five full-time staffers, one of whom is an administrator and office manager, overseeing a $30 billion book of business, the credit rating agency said in its report.

MBIA Inc., the largest US municipal bond insurer and the subject of widening regulatory probes, owns a stake in Channel Re but said the downgrade will have no material impact on its business. MBIA?s shares rose 2.5 percent. Also owning a stake in Channel are Bermuda-based companies RenaissanceRe Holdings Ltd. and Partner Re Ltd. as well as US company Koch Financial Corp.

The New York Attorney General?s office and the Securities and Exchange Commission are looking into the muni bond insurer?s relationship with Channel Re, the company said in a release in March.

Class-action lawsuits have charged that Channel Re was reinsuring troubled insurance policies from MBIA, and MBIA agreed to make up future losses from the policies, so that the muni bond insurer could make its financial statements look stronger, according to a recent quarterly filing from MBIA.

MBIA has said the suits have no merit.

Standard & Poor?s said on Wednesday that concerns have arisen that Channel Re?s staff is insufficient to manage its book of business. But the rating agency did not say that MBIA is giving troubled insurance policies to Channel Re.

S&P said Channel Re has sufficient capital for its top ?AAA? rating, and that the reinsurer?s owners have taken steps to ensure the risk assumed by Channel Re is similar to the risk retained by MBIA.

MBIA said in a statement that it would work with Channel Re?s other investors to address S&P?s concerns.

An outlook revision to negative from stable indicates that S&P is more likely to downgrade the company over the next 24 months.

S&P also affirmed Channel Re?s top ?AAA? financial strength and financial enhancement ratings.