Moody’s affirmed the A3 senior debt and Baa2 subordinated debt ratings of AEGON N.V. (AEGON) and the A1 insurance financial strength (IFS) ratings of AEGON's U.S. life insurance operating companies (collectively "AEGON USA"). Moody's maintains a negative outlook on all of AEGON's long-term ratings.
Moody's also affirmed the Prime-2 short-term ratings for commercial paper of AEGON N.V and AEGON Funding Co. LLC., and affirmed at Prime-1 the short-term IFS ratings of several AEGON USA subsidiaries.
Separately, Moody's withdrew the A1 IFS ratings and negative outlooks of Merrill Lynch Life Insurance Co. and ML Life Insurance Company of New York for business reasons.
Moody's said the affirmation of AEGON's ratings reflects the strong diversified franchise of the group, with leading positions in the United States, the Netherlands and the UK, the strong and improving group capital position and good liquidity and ALM management.
Fitch Ratings affirmed the ratings of American International Group Inc. (AIG):
• Issuer Default Rating (IDR) at 'BBB'
• Senior unsecured notes at 'BBB'
• Subordinated hybrid securities at 'B'
• Short-term IDR at 'F1'
AIG's rating outlook has been revised to stable from evolving. Fitch has also removed the 'A+' IFS ratings of AIG's domestic property/casualty subsidiaries from rating watch negative and affirmed the ratings and assigned stable rating outlooks. Additionally, Fitch affirmed the 'A-' IFS ratings of AIG's life insurance subsidiaries and revised the rating outlooks to stable from evolving
The 'A+' IFS rating on AIG's American Life Insurance Co. (ALICO) subsidiary remains on rating watch positive where it was placed on March 8, 2010, after AIG announced ALICO's planned sale to MetLife Inc. The 'A+' IFS rating on AIG's American International Assurance Co. (Bermuda) Ltd. subsidiary remains on rating watch evolving reflecting Fitch's belief that the company is likely to be divested by AIG as part of re-structuring efforts.
A.M. Best commented that the financial strength rating (FSR) of A- (excellent) and issuer credit ratings (ICR) of “a-” of American Physicians Group and its primary member, American Physicians Assurance Corp. (American Physicians), are unchanged following the recent announcement that American Physicians Capital Inc. (APCapital) entered into a definitive agreement to be acquired by The Doctors Co., an Interinsurance Exchange. The FSR of B+ (good) and ICR of “bbb-” of APSpecialty Insurance Corp. (APSpecialty) also are unchanged. The transaction is expected to close during the fourth quarter of 2010, subject to shareholder and regulatory approval.
Under the terms announced, The Doctors Co. will pay $41.50 per share, representing a 31% premium over APCapital’s closing price on July 7, 2010, the last trading day prior to the announcement of the acquisition. The terms of the merger agreement also prohibit APCapital from paying dividends or repurchasing its shares without the prior consent of The Doctors Co.
Moody's and S&P reacted to the announcement that Aon Corp. plans to acquire Hewitt Associates Inc. Total consideration will be approximately $4.9 billion, consisting of 50% cash and 50% Aon common stock.
Moody’s affirmed the ratings of Aon (senior unsecured debt rated Baa2), and changed the rating outlook to negative from stable. The negative rating outlook reflects the large amount of debt in the funding structure and the execution risk in such a large transaction, given that the purchase price amounts to about half of Aon's market capitalization as of June 30, 2010, and includes a substantial premium to Hewitt's current market value.
S&P affirmed its ratings on Aon, including the'BBB+' counterparty credit rating. The outlook on Aon remains stable. S&P believes the Hewitt acquisition will further bolster Aon's already strong global posture in the consulting area, will broaden and complement its overall business risk and earnings profile and create long-term operational synergies for the enterprise.
Catholic Relief Insurance Company of America
A.M. Best assigned an FSR of A- (excellent) and ICR of “a-” to Catholic Relief Insurance Company of America (CRIC). The assigned outlook is stable.
The ratings reflect CRIC’s balance sheet strength, historically strong operating performance, favorable net premium leverage and liquidity bolstered by a low expense profile and conservative investment portfolio. An additional strength is the captive’s partnership with the State of Vermont.
Fitch Ratings affirmed the 'BBB+' IDRs for Cigna Corp., its 'BBB' senior debt rating, and the 'A' IFS rating on its primary insurance subsidiaries. The rating outlook remains negative.
The action reflects the company's improving balance sheet and an expected return to solid earnings and cash flows after a difficult 2008 and early 2009, Fitch says. In recent quarters, the company's earnings have largely resumed the positive trends experienced prior to 2008, including steady earnings from its health care and life and disability businesses and good earnings from the company's growing international business. In addition, the large 2008 loss in its run-off variable annuity reinsurance business significantly improved due primarily to the recovery of financial markets in 2009.
A.M. Best assigned a debt rating of “bbb+” to the $85 million 8.50% 20-year surplus notes issued by CUNA Mutual Insurance Society (CMIS). The assigned outlook is negative. The existing FSR of A (excellent) and ICR of “a” of CMIS and its subsidiaries were affirmed on April 6, 2010, with a negative outlook.
The proceeds from the offering will be utilized by CMIS for general corporate purposes and will strengthen its statutory capital and surplus position. The negative outlook reflects A.M. Best’s concerns over CMIS’ exposure to continuing unrealized investment losses primarily from structured asset classes and the impact of the weak economy on CMIS’ core credit insurance businesses.
A.M. Best reacted to the announcement that First Mercury Financial Corp. (FMFC) has entered into a definitive agreement whereby its principal insurance subsidiary, First Mercury Insurance Co., will acquire Valiant Insurance Group Inc. (Valiant), and its wholly owned property/casualty subsidiaries, Valiant Insurance Co. and Valiant Specialty Insurance Co. from Ariel Holdings Ltd. (Ariel). Under the terms of the agreement, FMFC will pay an amount equal to Valiant’s tangible book value, which is anticipated to be approximately $55 million at closing. As part of the agreement, Ariel has agreed to provide FMFC with full protection related to the run off of Valiant’s net loss and loss adjustment expense reserves and unearned premium reserves on the closing date balance sheet.
The FSR of A- (excellent) and ICR of “a-” of First Mercury Group (First Mercury) and its members and the ICR of “bbb-” of FMFC are unchanged. The outlook for these ratings is positive.
A.M. Best placed under review with developing implications the FSR of A- (excellent) and ICR of “a-” of Valiant Insurance Co. and Valiant Specialty Insurance Co. (collectively known as Valiant). The ratings will remain under review pending regulatory review, approval and the completion of A.M. Best’s analytical process. The ICR for Ariel Holdings Ltd. is not impacted by the transaction.
A.M. Best commented that the FSR of A+ (superior) and ICR of “aa-” of PartnerRe Group (PartnerRe) and its members are unchanged following the company’s recent announcements regarding further changes among the executive management team. Concurrently, A.M. Best commented that the ICR of “a-” and debt ratings of PartnerRe’s parent, PartnerRe Ltd., also are unchanged. The outlook for all ratings is stable.
A.M. Best believes that any potential concerns regarding the number and/or significance of the recent management changes announced at PartnerRe are largely mitigated by the depth of experience, the continuity and the length of the transition period provided. In addition, PartnerRe has a strong enterprise risk management framework, including a well thought out succession plan, which will support the company during this transition, the rating agency says.
S&P affirmed its 'A+' rating on Australia-based holding company QBE Insurance Group Ltd.'s (QBE's) core operating companies, and its 'A' rating on QBE. The core operating subsidiaries include QBE Insurance (Australia) Ltd., QBE Insurance (International) Ltd., QBE Insurance (International) Ltd. (NZ Branch), QBE Insurance (Europe) Ltd., QBE Reinsurance (Europe) Ltd., QBE Insurance Corp., QBE Reinsurance Corp., Equator Reinsurances Ltd., Praetorian Insurance Co., QBE Specialty Insurance Co., and the operating companies of QBE Regional Cos. (N.A.) Inc. (QBE Regional).
The outlook on all the ratings is stable. The ratings affirmation reflects QBE's strong underwriting and operating performance during a period when several global insurance peers have experienced high volatility, S&P says. The ratings continue to benefit from a well-diversified business platform, and robust underwriting and reserving practices.
