A.M. Best Co. removed from under review with negative implications. and affirmed the financial strength rating (FSR) of B (fair) and issuer credit rating (ICR) of “bb” of American Medical and Life Insurance Co. (AMLI). The outlook assigned to both ratings is negative.
These rating actions follow A.M. Best’s review of AMLI’s second- and third-quarter financial results. The company had delayed its second quarter 2009 statutory filing pending the completion of a claims audit and actuarial review. Over the second and third quarters, AMLI reported operating losses totaling nearly $5.2 million, which noticeably eroded its capital and surplus position; however, these losses were within A.M. Best’s expectations. Despite the losses, the company continues to maintain an adequate risk-adjusted capital position for its ratings.
A.M. Best Co. affirmed the FSR of A- (excellent) and ICR of “a-” of Caribbean Alliance Insurance Co. Ltd. (CAI). The outlook for both ratings is stable.
The ratings are based on CAI’s continued solid capitalization, favorable operating performance and conservative underwriting strategy. The ratings also recognize management’s regional Eastern Caribbean expertise and solid risk management program. These favorable aspects are based on the company’s established underwriting guidelines and systems that control aggregates and limit exposures. In addition, catastrophe risk is mitigated by CAI’s efficient reinsurance program, which protects its capital from both the frequency and severity of events.
A.M. Best Co. affirmed the FSR of C++ (marginal) and ICR of “b” of Citizens Security Life Insurance Co. The outlook for both ratings is negative.
The rating affirmations reflect Citizens Security’s fluctuating capital levels, investment risk relative to capital and operating losses in recent years. The ratings also consider Citizens Security’s organizational initiatives to stabilize its capital position in 2009, reduce organizational expenses, growth in direct premium levels and an organizational focus on select core lines of business.
The negative outlook reflects Citizens Security’s investment exposures relative to capital and the potential for current unrecognized loss positions to be realized, further weakening the company’s capital position. A.M. Best will continue to monitor the company’s investment exposure and capitalization levels.
Fitch Ratings affirmed the “A” insurer financial strength (IFS) ratings of CUNA Mutual Insurance Society and its wholly owned property/casualty subsidiary CUMIS Insurance Society Inc. The rating outlook is negative. At the same time Fitch has withdrawn the above-mentioned ratings. The ratings of 50% owned affiliate, CMG Mortgage Insurance Co., are not affected by these actions.
Fitch's affirmation of CUNA Mutual's ratings reflects its view that the company's statutory total adjusted capital (TAC) and earnings profile remain consistent with current ratings. Fitch estimates CUNA Mutual's combined TAC was $1 billion as of Sept. 30, 2009, which is $117 million, or 10% less than year-end 2008. The negative rating outlook reflects Fitch's concerns regarding the potential for higher-than-expected investment losses due to the global financial crisis and deterioration in underwriting results in the CUNA Mutual's property casualty operations.
A.M. Best Co. assigned a debt rating of “bbb” to the recently issued $300-million 8.625% senior unsecured notes due December 2016 for Genworth Financial Inc. The notes are a drawdown from Genworth’s universal shelf registration, which was filed in August 2009.
Concurrently, A.M. Best assigned indicative debt ratings to the aforementioned shelf registration, which replaced the shelf filed in November 2006. The outlook assigned to all ratings is negative. The ratings on Genworth’s domestic life/health insurance companies and existing debt securities are unchanged.
A.M. Best Co. upgraded the FSR to B+ (good) from B (fair) and ICR to “bbb-” from “bb” as well as removed the ratings from under review with developing implications for Grain Dealers Mutual Insurance Co. The outlook assigned to both ratings is positive.
These rating actions follow the announcement that Grain Dealers and NGM Insurance Co. (NGM), the lead carrier of the Main Street America Group have executed an affiliation agreement following the approval by the Indiana Department of Insurance. The ratings and outlook for Main Street and its members are unchanged.
The upgrades reflect the rating enhancement afforded Grain Dealers’ based on NGM’s financial strength. The rating outlook reflects NGM’s plan to reinsure 100% of Grain Dealers’ business, including all prior liabilities into NGM, mitigating A.M. Best’s concerns regarding Grain Dealers’ diminished capitalization and history of unfavorable operating results.
Fitch Ratings has assigned a “BBB” rating to Lincoln National Corp.'s (LNC) proposed issuance of up to $300 million in new senior unsecured notes. The net proceeds from this issuance will primarily be used to prefund the repayment of the $250 million floating rate senior notes due on March 12, 2010. The rating outlook remains negative.
While LNC continues to face considerable challenges, primarily related to the impact capital market turmoil has had on the company's capital position and operating performance, Fitch takes a positive view of initiatives management has taken thus far to bolster capital and adjust to the current uncertain operating environment.
Fitch expects the effect of the ongoing recession and capital market turmoil to continue to pressure LNC and its peers, which is reflected in LNC's current ratings and negative outlook. The negative outlook also reflects Fitch's view that near-term adverse financial market and recessionary economic conditions could continue for an extended period. As a result, Fitch believes LNC could experience higher-than-expected volatility in financial results and capital.
A.M. Best Co. commented that the ratings of Oman Insurance Co. (OIC) are unchanged following the acknowledgement that OIC has no direct investment exposure to Dubai World group’s issued securities, whereas its underwriting exposure is limited to properties.
OIC’s interim results at the end of third quarter 2009 confirm the company’s strong technical profitability, as it remains one of the primary insurers in the region.
A.M. Best is monitoring the potential impact on Mashreqbank following the recent events on Dubai World’s standstill agreement and its potential effect on OIC’s financial strength.
A.M. Best Co. affirmed the FSR of A+ (superior) and ICR of “aa” of the Progressive Agency Pool, Progressive Direct Pool and Progressive Commercial Auto Group (collectively known as Progressive) and their respective members. A.M. Best also affirmed the FSR of A (excellent) and ICR of “a+” of National Continental Insurance Co. Additionally, A.M. Best affirmed the ICR of “a” and all debt ratings of the parent holding company, The Progressive Corp. The outlook for all ratings is stable.
The ratings reflect Progressive’s solid capitalization, strong operating performance and sustainable competitive advantages, the rating agency says. Progressive’s capitalization has benefited from improved underwriting results in 2009 and a rebound in its investment portfolio. Progressive continues to benefit from an innovative management team, brand name recognition, a multiple channel distribution platform and innovative underwriting and claims handling technology.
S&P revised its outlook on White Mountains Insurance Group Ltd. (WTM), OneBeacon Insurance Group Ltd. (OB) and the members of OneBeacon Insurance Group (OneBeacon) to stable from negative. At the same time, S&P affirmed its “BBB” counterparty credit ratings on WTM and OB and its “A” counterparty credit and financial strength ratings on OneBeacon. WTM irrevocably and unconditionally guarantees the senior debt of OB's subsidiary, OneBeacon U.S. Holdings Inc.
In addition, S&P affirmed its “BBB-” counterparty credit rating on White Mountains Re Group Ltd. (WMRe) and its “A-” counterparty credit and FSR on White Mountains Re America (formerly Folksamerica Reinsurance Co.) and Sirius International Insurance Corp. The outlook on these companies remains stable.
Zurich Group Holding
A.M. Best Co. and S&P took action on Zurich Group Holding (ZGH) after the completion of the merger with Zurich Financial Services (ZFS). ZGH was a subsidiary of ZFS and an intermediate holding company within the Zurich group of companies.
A.M. Best has withdrawn the ICR of “a” and assigned an “nr” to ZGH, due to the merger, and S&P affirmed its 'A' counterparty credit ratings on ZGH.
