S&P Global Ratings on Dec. 9 affirmed the national scale ratings of Austral Seguradora SA and Austral Resseguradora SA at brA+ with a negative outlook.

The ratings are based on the firms' adequate operating performance compared to their peers, but also their "less than adequate" financial risk profile and concentration of investments in speculative instruments, S&P said.

The negative outlook reflects the outlook on Brazil's sovereign ratings, which means the ratings agency could lower the insurance firms' ratings if the sovereign ratings are cut again.

S&P downgraded the ratings of the two firms in July, along with the ratings of several other Brazilian insurers and reinsurers, following the country's sovereign downgrade in February and the subsequent revision of Brazil's P&C insurance industry and country risk assessment.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.