Three operating subsidiaries of Bermuda based ESG Re Ltd. have been put on CreditWatch with negative implications by Standard & Poors (S&P) rating agency.

S&P said yesterday it had placed its double `B' minus long-term counterparty credit and insurer financial strength ratings on ESG Reinsurance Bermuda Ltd., ESG Reinsurance Ireland Ltd. and European Specialty Ruckversicherung AG on CreditWatch with negative implications.

S&P credit analyst Manish Bakhda said: "The CreditWatch placement reflects ESG's week operating performance (just announced as part of its second quarter results), the consequent impact on capitalisation, and the potential for future additional provisions."

The second quarter results which include a pre-tax loss of $23.3 million, have been adversely affected by a poorly performing Norwegian health insurance treaty and related foreign exchange losses. S&P said they will meet with ESG management to review the treaty, prospects for future earnings and capitalisation.