AM Best has downgraded the financial strength and issuer credit ratings of New Zealand local government insurer Civic Assurance, moving them to B+ good from B++ good.

The outlook on both ratings has been reduced to negative from being under review with negative implications.

AM Best says the ratings reflect concerns about Civic’s reinsurance recoveries from the Christchurch earthquakes.

Civic CEO Tim Sole told insuranceNEWS.com.au the insurer is awaiting arbitration with AIG and R+V of Germany over recoveries. The AIG arbitration will start in December, while the R+V matter is likely to start in May.

Reinsurance covered almost all of Civic’s losses from the Canterbury quakes. Mr Sole says he is confident Civic will recover from the reinsurers.