A.M. Best, Fitch Ratings, Moody’s Investors Service and Standard & Poor's announced ratings updates. The following are some of the most recent:


American International Group Inc.

American International Group Inc’s (AIG) ratings are unchanged following Fitch Ratings’ recent review of the Notice of Public Rulemaking (NPR) titled “Implementing Certain Orderly Liquidation Authority Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act,” which was issued by the Federal Deposit Insurance Corp. (FDIC) on Oct. 12, 2010.

The NPR states that under no circumstances should taxpayers be called upon to “bail out” systemically important financial institutions in the future, nor be exposed to loss in the resolution of these companies, Fitch says. The NPR also makes clear that creditors, including senior bondholders, should bear their proportion of loss in an orderly resolution.

Fitch recognizes that AIG’s ratings continue to receive uplift due to ongoing government involvement following intervention initiated in late 2008. Potentially, if made final in its current form, the provisions of the NPR could place some restrictions on how the government would be able to continue to support AIG and other financial institutions.

Fitch believes that the proposed restrictions of NPR are not intended to apply to or constrain actions related to support already provided, including situations like AIG where the government has a large equity ownership. Thus despite the potential restrictions implied by the NPR, Fitch continues to believe that the U.S. Government will be able to take reasonable steps necessary to maximize the value of its large equity ownership interest in AIG. As a result, Fitch believes the level of uplift assigned to AIG’s ratings related to government ownership and related support already in place remains appropriate.


Assured Guaranty Corp. and Assured Guaranty Municipal Corp.

S&P lowered its counterparty credit and financial strength ratings on Assured Guaranty Corp. (AGC) and Assured Guaranty Municipal Corp. (AGM) to 'AA+' from 'AAA'. The outlook on both companies is stable. We also affirmed our 'A+' counterparty credit rating on Assured Guaranty Ltd., and the outlook remains stable.

The downgrades reflect S&P’s view that the current state of the financial guarantee market, with only one organization issuing new policies, is symptomatic of investors' and issuers' diminished demand for bond insurance. The longer this persists, the more limited the potential for the reemergence of a strong and vital bond insurance sector, the rating agency says. This market dynamic, in turn, could hurt AGC's and AGM's business prospects.

Conversely, as a result of less competition, the companies benefit from an increasing share of the insured business and will most likely be the first and largest beneficiary of any improved market for insured paper. On a combined basis, the companies have reported what S&P considers to be weak statutory operating results in recent years, as their negative statutory net income for the past two years and the first six months of 2010 demonstrates. This could continue in the near term given the rating agency’s projected non-stress loss expectation for the RMBS exposures, which could limit statutory surplus growth. S&P recognizes the favorable GAAP results, but the statutory statements represent the solvency perspective, that is, the companies' ability to meet their obligations under their financial guarantee policies


IFA Insurance Co.

A.M. Best revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of B++ (good) and issuer credit rating (ICR) of “bbb” of IFA Insurance Co. (IFA).

The affirmation of the ratings reflects IFA’s adequate risk-adjusted capitalization, its longtime experience in the New Jersey automobile marketplace and conservative investment portfolio with consistent investment income, the rating agency says. In addition, the company continues to refine its underwriting criteria and implement rate increases.


Liberty Life Insurance Co.

A.M. Best Co. downgraded the FSR to A- (excellent) from A (excellent) and ICR to “a-” from “a” of Liberty Life Insurance Co. Both ratings remain under review with negative implications.

The rating actions follow the announcement that Athene Holding Ltd. has signed a definitive agreement to acquire Liberty Life from the Royal Bank of Canada (RBC) for a purchase price of $628.1 million. As part of this transaction, substantially all of the life/health business of Liberty Life will be coinsured to Protective Life Insurance Company, and a portion of Liberty Life’s annuities will be coinsured to Athene Life Re Ltd., a Bermuda-domiciled subsidiary of Athene Holding Ltd.

Given the announcement of the sale, A.M. Best is no longer affording ratings enhancement to the ratings of Liberty Life from RBC. Liberty Life had historically represented the U.S. life insurance and annuity operations of RBC. The ratings of Liberty Life were placed under review with negative implications on Sept. 7, 2010, when RBC announced that it was reviewing all “strategic options” for its U.S. insurance business. Liberty Life’s ratings had previously recognized the financial strength and historical support of RBC, as demonstrated by the capital support received in 2009 of $50 million to fund fixed annuity growth and offset realized investment losses.

The ratings of Liberty Life will remain under review with negative implications given that the future financial flexibility and strategic direction of the company is unclear at this time.


North Coast Life Insurance Co.

A.M. Best Co. placed under review with positive implications the FSR of C+ (marginal) and ICR) of  “b-” of North Coast Life Insurance Co.

The rating actions are based on the Oct. 19, 2010, announcement by North Coast of its intention to be acquired by Government Personnel Mutual Life Insurance Co. (GPM). Under the proposed agreement, North Coast would continue operations as a subsidiary of GPM. Following regulatory approval, the change in ownership is expected to take effect by Dec. 31, 2010, but could extend into the first quarter of 2011.

A.M. Best notes that North Coast and GPM have previously been strategic partners, as they have had a reinsurance agreement in place since 2008. The positive implications reflect the potential incorporation of North Coast policyholders into a stronger organization. The FSR of A- (excellent) and ICR of “a-” of GPM are unchanged by this transaction.


Pacific Pioneer Insurance Co.

A.M. Best Co. has upgraded the FSR to B++ (good) from B+ (good) and ICR to “bbb” from “bbb-” of Pacific Pioneer Insurance Co. The outlook for both ratings is stable.

The rating actions reflect Pacific Pioneer’s solid risk-adjusted capitalization, consistent operating earnings and local market expertise, A.M. Best says. The positive attributes reflect the company’s focused underwriting and claims management, which has produced favorable operating results, despite the significant reduction in its commercial multi-peril line of business in California.


Protective Life Corp.

Moody's Investors Service affirmed the debt ratings of Protective Life Corp. (Protective) (senior debt at Baa2) and the A2 IFS rating of its operating subsidiaries, following the company's announcement that it had signed a definitive agreement to coinsure the individual life insurance business of Liberty Life Insurance Co. (Liberty Life—not rated), a subsidiary of Royal Bank of Canada. Protective's rating outlook is stable. The transaction is expected to close in the first quarter of 2011, in conjunction with Athene Holding Ltd.'s acquisition of Liberty Life, subject to regulatory approval.

Liberty Life will coinsure its individual life business to Protective Life Insurance Co. (PLICO), Protective's lead life insurance operating company. PLICO will invest a total of $310 million consisting of a ceding commission paid to Liberty Life and statutory capital to support the business at Protective's target regulatory risk-based capital (RBC) level of 350%. Liberty Life's closed block of individual life insurance, with about $1.6 billion in reserves and assets that will be transferred to PLICO, will become part of Protective's Acquisition segment.

The affirmation of Protective's ratings and stable outlook reflect the relatively low risk profile of the acquired liabilities, and the expectation that the NAIC risk based capital (RBC) ratio will be maintained at a minimum of 350%, the rating agency says. Liberty Life's individual life insurance business is a seasoned block of primarily small 'home service' policies with predictable persistency and mortality. Protective has a core competency of acquiring small life insurance companies and blocks of business and has a proven track record of administering the business on a cost-efficient basis. Because of the large number of small policies being acquired, Moody's says it expects Protective will outsource policy administration for the Liberty Life block.


QBE International Holdings

S&P assigned its 'A' long-term counterparty credit rating (CCR) to U.K.-based QBE International Holdings (UK) PLC (QBE IHUK), the holding company for the core European-based operations of Australia-based QBE Insurance Group Ltd. (QIG; CCR A/stable/--), the ultimate holding company of the QBE Group. At the same time, S&P affirmed the 'A' IFS rating on Belgium-based reinsurer Secura N.V. and removed the rating from CreditWatch where it was placed with negative implications on July 5, 2010. The CreditWatch placement followed the announcement of its sale by KBC Insurance N.V. (IFS and CCR A/stable/--) to QBE Group. The rating agency also withdrew the CCR on Secura. The outlooks on both QBE IHUK and Secura are stable.

The 'A' CCR on QBE IHUK reflects S&P’s view of its position as the intermediate holding company of the global QBE Group's core European operations. As a result, the rating agency aligns the CCR on QBE IHUK with that on QIG, the group's ultimate holding company. The affirmation of Secura's financial strength rating at 'A' reflects S&P’s expectation that QBE IHUK will guarantee the company's reinsurance obligations.


State Farm Mutual Automobile Insurance Co. and operating subsidiaries

S&P revised its outlook on State Farm Mutual Automobile Insurance Co., its related entities (collectively referred to as State Farm), State Farm Life Insurance Co. and State Farm Lloyd's, to stable from negative. At the same time, S&P affirmed its 'AA' counterparty credit and financial strength ratings on all of the core insurance companies, and affirmed its 'AA-'rating on State Farm Lloyd's. The rating agency considers State Farm Life and its affiliates to be core and State Farm Lloyd's to be strategically important to the P&C companies under our group methodology criteria.

The stable outlook reflects the increase in State Farm's capital cushion owing to recovery in capital markets, which helped to further solidify its already extremely strong capital position, S&P says. The recovery in asset values and improved operating performance led to a 9% increase in its surplus as compared to that for 2008.  


Torus Insurance Holdings Ltd. and operating subsidiaries

A.M. Best Europe – Rating Services Limited affirmed the FSR of A- (excellent) and ICR of “a-” of Torus Insurance (Bermuda) Limited (Torus Bermuda) (Bermuda), Torus Insurance (UK) Limited (Torus UK) (United Kingdom), Torus Specialty Insurance Company (Torus Specialty) (Wilmington, Delaware), Torus National Insurance Co. (Torus National) (Wilmington, Delaware) and Torus Insurance Europe AG (Torus Europe) (Liechtenstein). Concurrently, A.M. Best affirmed the ICR of “bbb-” of Torus Insurance Holdings Limited (Torus) (Bermuda), the group’s ultimate parent holding company. The outlook for all ratings remains stable.

The ratings of the Torus group reflect A.M. Best’s expectation that consolidated risk-adjusted capitalization will remain strong. Additionally, stand-alone risk-adjusted capitalization at each Torus group subsidiary is expected to remain supportive of its rating level. Torus Bermuda operates as the recipient of the majority of the group’s risk through a 65% quota share and an aggregate stop loss of Torus UK. In turn, Torus UK provides the same cover to Torus Specialty and Torus National. Torus Bermuda also provides reinsurance support to Torus Europe through a 95% quota share arrangement.

Although risk-adjusted capitalization is sufficient to support growth, an offsetting factor is the level of growth anticipated in the U.S. market, which A.M. Best believes will be difficult to achieve given current challenging market conditions without an adverse effect on performance. In view of this, A.M. Best will continue to closely monitor Torus’ growth and performance at each individual operating entity.

In 2010, a technical loss is anticipated reflecting Torus’ exposure to the major loss events of the year to date, including the Chilean earthquake and the Deepwater Horizon oil rig explosion, and the high expenses associated with the group’s expansion. Despite this, A.M. Best anticipates a consolidated pre-tax profit, albeit lower than the USD 43.8 million reported in 2009. Performance in 2009 benefited from the absence of significant catastrophe losses during the year and a solid investment return from the group’s cash and highly rated fixed income portfolio.


UnitedHealth Group Inc. 

Moody's and S&P assigned ratings to UnitedHealth Group's (UNH) issuance of $750 million of new long-term debt. The debt issuance is a draw on the company's shelf registration, which it filed in February 2008. UnitedHealth expects to use the net proceeds for general corporate purposes including refinancing of maturing debt.

Moody’s assigned a Baa1 senior unsecured debt rating, and the outlook on the rating is stable. Moody's said that with the additional debt, UnitedHealth's financial leverage (debt to capital, where debt includes operating leases) is not expected to change appreciably from its current level of approximately 33.4% as of Sept.30, 2010. The rating agency noted that UnitedHealth has approximately $250 million of debt maturing in November 2010 and $1.0 billion due during the first quarter of 2011, which it anticipates will offset a portion of this increase in debt.

S&P assigned its 'A-' rating on UNH’s planned issuance. The rating on the new issuance reflects UnitedHealth's very strong business profile, improving earnings and cash flow, and strong liquidity and financial flexibility, S&P says. The rating agency expects UnitedHealth to use the offering proceeds primarily to refinance outstanding debt that is scheduled to mature within the next six months. Although it will increase financial leverage metrics in the near term, we believe this effective restructuring of the balance sheet obligations will moderately enhance near-term liquidity and financial flexibility.

The stable outlook reflects the limited potential that we would raise the rating in the next 12 to 24 months. It also reflects S&P’s expectation that UnitedHealth will maintain its generally strong market share in its core market segments, which should facilitate sustained revenue growth, stable operating margin performance, and strong balance sheet liquidity.

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