Moody’s has downgraded the insurance financial strength of Monticello Insurance, the captive of Vale SA, to "B1" from "Ba1" with a negative outlook.
Monticello is the captive reinsurance subsidiary of Brazil-based Vale, a metal and mining company.
The downgrade comes after Moody’s downgraded the captive’s parent company from "Ba3" to "Baa3".
Moody's believes that Monticello’s insurance financial strength rating benefits from the support provided by Vale, reflecting Monticello’s close integration with the global risk management function of the group.
The lowering of the parent company’s ratings has resulted in both a diminished fundamental credit profile, and a weakened level of support for Monticello, which caused Moody’s to downgrade the captive insurance financial strength rating.
Monticello is a core part of Vale’s risk management programme and the sole insurance captive utilised in Vale’s property insurance and business interruption programme worldwide.
According to Moody’s, an upgrade is unlikely, but a return to a stable outlook for Vale’s rating could lead to a stable outlook for Monticello.
