A.M. Best Co. assigned a debt rating of “bbb+” to the $750 million 3.95% senior unsecured notes, due 2020 recently issued by Aetna Inc. The rating outlook is stable.
The rating agency expects the proceeds from this offering to be used by Aetna for general corporate purposes, which may include the repayment of short- and long-term debt. The existing ratings of Aetna and its subsidiaries are unchanged.
This offering is expected to have a minimal impact on Aetna’s financial leverage, A.M. Best says. Aetna’s debt-to-capital ratio was 28.3% at June 30, 2010, which was down from year-end 2009, mainly due to higher than expected earnings from operations. A.M. Best expects Aetna will manage its financial leverage to a target of 30% or below for year-end 2010.
A.M. Best affirmed the financial strength rating (FSR) of A (excellent) and issuer credit ratings (ICR) of “a” of the operating company, Alterra Bermuda Ltd. (Alterra Bermuda) (formerly Alterra Insurance Ltd.), which is an amalgamation of Alterra Capital Holdings Ltd.’s (Alterra) Bermuda operating subsidiaries: Alterra Insurance Limited and Harbor Point Re Limited (Harbor Point Re). All ratings have a stable outlook. This rating action also applies to Alterra Bermuda’s affiliated operating companies.
Concurrently, A.M. Best withdrew the ratings of Harbor Point Re and assigned a category NR-5 (Not Formally Followed) to the FSR and an “nr” to the ICR, as the company has been merged out of existence.
The rating affirmation of Alterra Bermuda and its strategic affiliates follows the recent completion of a corporate restructuring, merging Harbor Point Re into Alterra Insurance Limited to form Alterra Bermuda Limited. The affirmation considers the combined risk-adjusted capitalization, performance and operational efficiency the new structure brings to the group. A single operating company in Bermuda is more efficient for the organization and provides a larger base of capital for policyholders, A.M. Best says.
Moody's affirmed the ratings of Amlin plc (Baa2 subordinated), and Amlin Lloyd's syndicate 2001 (A1 IFSR) with a stable outlook. At the same time, Moody's affirmed the A2 IFSR of Amlin Bermuda Limited and revised the outlook on this rating to positive.
The rating affirmations reflect the Amlin Group's (Amlin) good franchise, strong profitability driven in recent years by syndicate 2001, prudent reserving, excellent asset quality and good financial flexibility, Moody’s says.
Moody's assigned a Baa2 rating to $1.5 billion of senior unsecured notes being issued by Aon Corp. to fund a portion of its proposed acquisition of Hewitt Associates Inc. The notes will have maturities of five, 10 and 30 years, and will eliminate the need for Aon to borrow under the $1.5 billion bridge loan facility that was arranged shortly after the acquisition was announced. The acquisition is subject to regulatory, stockholder and other approvals and is expected to close during the fourth quarter of 2010. The rating outlook for Aon remains negative.
Aon's ratings reflect its strong market presence and its expertise in providing risk management solutions to middle-market, national and global clients, says Moody's. The ratings also reflect the firm's broad geographic and product diversification. These strengths are tempered by Aon's moderate but improving operating margins.
Fitch Ratings affirmed the issuer default rating (IDR) of Cincinnati Financial Corp. (CFC) at 'A-' and its senior debt ratings at 'BBB+'. Additionally, Fitch affirmed the insurer financial strength (IFS) ratings of CFC's three standard market property/casualty insurance subsidiaries led by The Cincinnati Insurance Co. (CIC) and its life insurance subsidiary, The Cincinnati Life Insurance Co., at 'A+'. The rating outlook is stable.
CFC's ratings strengths include its conservative operating subsidiary capitalization supported by a strong holding company cash position, moderate holding company leverage, a high-quality liquid bond portfolio with ample liquidity to meet its policyholder obligations, and competitive advantages from its successful single-channel distribution system, Fitch says. The ratings also recognize the steps CFC has taken to rebalance its common stock portfolio to reduce capital and earnings volatility going forward.
A.M. Best affirmed the FSR of A- (excellent) and ICR of “a-” of the life/health and property/casualty operating subsidiaries of Colonial Group International Ltd. (Colonial Group). The outlook for all ratings is stable. Colonial Group is a wholly owned intermediate holding company of Edmund Gibbons Ltd., the ultimate parent company.
The rating affirmations reflect the operating subsidiaries’ adequate risk-based capitalization, the consistent increase in total consolidated equity despite some unfavorable operating results in the most recent year, and their diversified business profiles, with the focus being on life/health and property/casualty markets in Bermuda, the Bahamas, Cayman Islands and the Caribbean.
Colonial Group’s life/health subsidiaries have reported unfavorable underwriting results in the most recent year with the exception of Colonial Life Assurance Company Ltd., whose net underwriting losses narrowed in 2009 over 2008. Colonial Medical Insurance Company Ltd. and Atlantic Medical Insurance Ltd. were negatively affected by unusually high cost claims experience triggered mostly by a weak economic environment. Both are regional companies with a continued strong presence in their respective health markets. On a net income basis, the life/health subsidiaries’ combined results were lower in 2009 from 2008 but remained positive due to an improvement in the financial markets.
A.M. Best downgraded the FSR to D (poor) from C+ (marginal) and ICR to “c” from “b-” of Constitutional Casualty Co. The outlook for both ratings is negative.
The rating actions reflect Constitutional’s weak level of capitalization following several years of underwriting losses and its trend of negative operating income, A.M. Best says. The recent operating losses were significant and reflect the company’s geographic concentration of risk that exposes it to weather-related events.
S&P corrected its outlook on the 'BBB' financial strength and counterparty credit ratings on Genworth Financial Mortgage Insurance Ltd. (GFMI Europe). The outlook is stable.
The rating and outlook on GFMI Europe is based upon an unconditional guarantee provided by its ultimate parent, Genworth Financial Inc. (GNW). As such, the ratings and outlooks for GNW and GFMI Europe are equalized. On May 6, 2010, the outlook on GNW was revised to stable from negative. Due to an administrative error, the revised stable outlook was not assigned to GFMI Europe.
A.M. Best Co. affirmed the FSR of A- (excellent) and ICR of “a-” of Commonwealth Annuity and Life Insurance Co. (Commonwealth) and its subsidiary, First Allmerica Financial Life Insurance Co. (FAFLIC) and Columbia Capital Life Reinsurance Co. (Columbia) and its subsidiary, Charleston Capital Reinsurance LLC (Charleston). The outlook for all ratings is stable. Commonwealth and its affiliates are ultimately wholly owned subsidiaries of The Goldman Sachs Group Inc. (Goldman Sachs).
Commonwealth reinsures universal life, variable universal life and other types of policies, while FAFLIC reinsures traditional life, payout annuities and other types of policies. The entire book of business at Columbia and Charleston is currently comprised of blocks retroceded from Commonwealth.
The ratings recognize the consolidated solid risk-adjusted capitalization of the Goldman Sachs life reinsurance companies, the history of GAAP earnings (despite fluctuating statutory results) and strong liquidity, A.M. Best says. The ratings also consider the agency’s expectation that the reinsurance group has access to capital, hedging expertise, deal flow and other Goldman Sachs resources, as needed. Commonwealth also has improved its risk profile by ceding its variable annuity business to a Bermuda affiliate.
A.M. Best placed under review with negative implications the FSR of A (excellent) and ICR of “a” of Liberty Life Insurance Co. Liberty Life represents the U.S. life insurance and annuity operations of its ultimate parent, Royal Bank of Canada (RBC), Canada’s largest bank as measured by assets and market capitalization and among the largest banks in the world, based on market capitalization.
The rating action follows the announcement by RBC that it is reviewing “strategic options” for its U.S. insurance business. Liberty Life’s ratings recognize the financial strength and historical support of RBC. The company presently benefits from its affiliation with RBC through its capital resources and risk management expertise, as well as the potential distribution opportunities afforded it by other RBC companies in the United States that provide investment, mortgage and banking services. In addition, Liberty Life received capital support of $50 million in 2009 to fund fixed annuity growth and offset realized investment losses. Given this strategic review, A.M. Best is uncertain about RBC’s future commitments to Liberty Life.
S&P affirmed its 'BBB-' counterparty credit rating on ProAssurance Corp. The rating agency also said that the outlook on PRA remains positive, following ProAssurance’s announcement that it has signed a definitive agreement to acquire American Physicians Service Group Inc. for approximately $233 million ($32.50/share). S&P expects that the transaction, which PRA intends to fund through an all-cash transaction, will close by year-end 2010, subject to customary closing conditions and regulatory approval.
The affirmation reflects the rating agency’s view that the announced acquisition will not change expectations for PRA, and the acquisition of AMPH will moderately enhance PRA's market position, diversify its revenue stream geographically, and provide it with meaningful footprints in Texas and incremental business in Oklahoma and Arkansas in the long term.
