Audubon Insurance Co.
Standard & Poor's withdrew its 'A+' financial strength rating on Audubon Insurance Co., following the merger of all of Audubon's assets and liabilities into National Union Fire Insurance Co. (A+/Negative/--).
A.M. Best Co. revises the outlook to negative from stable and affirms the financial strength rating of A- and issuer credit rating of “a-” of Austin Mutual Insurance Co. The negative outlook reflects the deterioration in operating performance and policyholders’ surplus during the past three and one-half years.
The ratings recognize that Austin Mutual has maintained a strong, albeit declining, level of risk-adjusted capitalization, historically favorable loss reserve development trends, long-standing agency relationships, and a conservative operating strategy.
However, these positive rating factors are partially offset by the company’s deteriorating operating performance during the past five years. Total underwriting losses, declining net investment income and increased pension obligations have contributed to the decline in policyholders’ surplus. Underwriting losses were primarily caused by several years of frequent and severe weather-related losses in its “core” lines of business and operating territories.
A.M. Best Co. upgrades the financial strength rating (FSR) to A- from B++ and issuer credit rating (ICR) to “a-” from “bbb+” of Farm Bureau Life Insurance Co. The agency affirms the FSR of B+ and the ICR of “bbb-” of FB Life’s affiliate, EquiTrust Life Insurance Co.
A.M. Best affirms the ICR and debt ratings of “bb,” as well as the indicative ratings on securities available under the shelf of FBL Financial Group Inc., the parent of FB Life and EquiTrust. The outlook for all ratings has been revised to stable from negative.
A.M. Best’s believes that the significant capital calls from FFG to fund the rapid growth at EquiTrust will no longer be necessary. Thus, the rating drag has been removed from the ratings of FB Life.
A.M. Best notes that FFG has $100 million in private debt due in 2011, and believes that additional investment impairments will likely be within tolerance for the organization’s capital position, even as commercial mortgage-backed securities and commercial mortgage loan portfolios are likely to remain under pressure for the near term. The agency also believes that spread management will continue to be a challenge for FFG, although spreads are within prescribed targets.
The following debt ratings have been affirmed: FBL Financial Group Inc., “bb” on $75 million 5.85% senior unsecured notes, due 2014, and “bb” on $100 million 5.875% senior unsecured notes, due 2017.
The following indicative ratings on securities available under the shelf registration have been affirmed: FBL Financial Group Inc., “bb” on senior debt, “bb-” on subordinated debt, and “b+” on preferred stock. FBL Financial Group Capital Trust II, “b+” on trust preferred securities.
A.M. Best Co. affirms the financial strength ratings (FSR) of A+ and issuer credit ratings (ICR) of “aa-”of Houston Casualty Group (HCC), its P&C members and HCC Life Insurance Co.
A.M. Best upgrades the FSRs to A+ from A and the ICRs to “aa-” from “a+” of American Contractors Indemnity Co., United States Surety Co. and Perico Life Insurance Co. The agency affirms the FSR of A- and ICR of “a-” of Pioneer General Insurance Co. The outlook for all the above ratings is stable, except HCC’s ICRs, which are positive.
A.M. Best affirms the ICR of “a-”, debt rating of “a-” on $300 million, 6.3% senior unsecured 10-year notes due 2019 of the holding company, HCC Insurance Holdings Inc. and all indicative ratings of HCC Capital Trusts I and II, which may be issued under HCC Holdings’ shelf registration statement. The outlook for all debt ratings, including HCC Holdings’ ICR, is positive.
Kazakh Amanat Insurance
Fitch Ratings assigns Kazakhstan-based Amanat Insurance a “B” Insurer Financial Strength (IFS) rating and a National IFS “BB(kaz)” rating. The outlooks are stable.
The ratings consider the operational challenges faced by Amanat, due to the forced restructuring commenced in 2009, and also caused by the unfavorable environment in the Kazakh insurance sector. The ratings also reflect the insurer's strong risk-adjusted capital position, largely driven by a dramatic decline of net premiums written in 2009 and expected to be further supported by a capital injection in Q410.
Exit of the minority shareholder and full change in the management team in Q109 resulted in 68% decline of Amanat's gross written premium (GWP) in 2009. The combined ratio rose far above 100%, largely driven by the expense ratio and delayed payment of the reinsurance costs for the portfolio written in 2008. Amanat's return on adjusted equity remained positive in 2009, supported by investment income. The portfolio started to recover in 2010, with GWP growth reaching 67% in 8M10.
Moody's affirms the Aa3 insurance financial strength rating of Mapfre Global Risks and the A1 IFSR of Mapfre Asistencia with a negative outlook. Mapfre Global Risks is the commercial unit of the Mapfre Group, the largest Spanish insurance group, providing global solutions to international corporate clients.
Moody's says the affirmation of the ratings primarily reflects the strong performance reported by the Mapfre Group as a whole in the last 18 months. Moody's believes that the financial strength of the group is supported by a strong franchise in Spain and in Latin America.
Moody's says Mapfre Global Risks has been significantly impacted by the slowdown of the economy, especially in Spain. Moody's also says although the overall profitability of the group has, thus far, remained at a strong level, Mapfre could still experience further deterioration, given the uncertainties on the macroeconomic environment.
Moody's notes that Mapfre America, representing 26% of the group's non-life premiums, and experiencing a rapid growth, still operates with a combined ratio (103.9% in 2009 and 100.3% in 2010) significantly higher than Mapfre's domestic operations, which could also contribute to weaken the group's overall non-life profitability going forward.
Moody's expects Mapfre's corporate fixed income portfolio to continue to remain under pressure in the short to medium term. Nonetheless, the agency notes that the group's exposure to hybrid debt is limited, and the average rating for the fixed income portfolio was Aa at year-end 2009. Mapfre's fixed income portfolio also includes around 15% of Spanish government bonds, recently downgraded by Moody's to Aa1 from Aaa, with a stable outlook.
Philadelphia-United Life Insurance Co.
A.M. Best Co. places under review with positive implications the financial strength rating (FSR) of B+ and issuer credit rating (ICR) of “bbb-” of Philadelphia-United Life Insurance Co.
The rating action is based on the Oct. 15, 2010, announcement by The Baltimore Life Insurance Co. that it has signed a stock purchase agreement to acquire P-UL during the fourth quarter of 2010.
The proposed transaction will benefit BLI, as P-UL is considered to be a viable strategic fit, and will add premium growth while generating expense efficiencies. P-UL’s block of business, which is mostly final expense coverage, is similar to BLI’s product offerings. A.M. Best believes that the level of risk associated with this transaction is manageable for BLI, given its strong risk-adjusted capitalization. In addition, the transaction will allow BLI access to P-UL’s distribution network. BLI’s FSR of B++ and ICR of “bbb+” are unaffected by this transaction.
A.M. Best Co. affirms the financial strength rating (FSR) of A- and issuer credit ratings (ICR) of "a-" of Service Insurance Group (SIG) and its member, Service Lloyds Insurance Co. A.M. Best has affirmed the FSR of B+ and ICR of "bbb-" of Service Life & Casualty Insurance Co. The ratings are based on the consolidated results of Service Lloyds Insurance Co. and its run-off subsidiary, Heartland Lloyds Insurance Co. The outlook for all ratings is stable.
The ratings reflect SIG's capitalization, operating earnings achieved through prudent reserving practices, and investment income, and established market presence within its niche segments. Partially offsetting these positive factors is the concentration risk as a single state workers' compensation writer.
The affirmation of the ratings for Service Life & Casualty recognizes its level of capitalization and continued positive earnings performance. Offsetting factors include the company's limited business
profile as it has ceased issuance of new credit insurance policies, and a high concentration of real estate mortgage loans, and other NAIC Schedule BA asset investments.
A.M. Best Co. upgrades the financial strength rating to A from A- and issuer credit rating to “a” from “a-” of Tenet Insurance Co. Ltd. These ratings have been removed from under review with positive implications and assigned a stable outlook.
The rating actions are based on the expected implicit support from Tenet’s new parent, Sompo Japan Insurance Inc. since June 1. Potential gains arising from the implicit support, include sharing of the group’s in-house facilities.
The ratings recognize Tenet’s capitalization level, recovered operating result and sound liquidity of its invested assets. Tenet recorded an overall operating profit in 2009 of SGD 9.5 million, compared to a loss of SGD 4.3 million in 2008, driven by the financial market pick-up and the release of claims reserves.
Moody's affirms the ratings of The Travelers Cos. Inc. and its insurance subsidiaries insurance financial strength ratings (IFS) at Aa2. The outlook for the ratings remains stable.
According to Moody's, the rating affirmations reflect Travelers' franchise in U.S. personal, commercial and specialty property-liability lines of business, and its presence in the independent agency distribution system, as well as its strong and sustained core operating performance, asset quality, and risk-adjusted capitalization measures. The agency adds that Travelers' earnings and cash flow coverage measures, and its holding company liquidity, also are supportive of the rating.
Moody's says current ratings reflect the expectation that financial leverage, adjusted for lease and under-funded pension obligations and uncollateralized letters of credit at Lloyd's, will remain below 25% and 30%, respectively, of total and tangible capital; that GAAP pre-tax earnings coverage of interest expense will exceed 10x; and that unencumbered dividend capacity—exclusive of cash held at the holding company—will cover annual interest expense and preferred dividends at a level of 5x or greater. Moody's expects the company's share repurchase program to be executed over time in an orderly fashion, and commensurate with prospective operating performance, so as not to result in sharp changes in the group's overall financial profile.
Moody's places on review for possible upgrade the insurance financial strength rating (A1) and debt ratings (A2 senior, A3 subordinated, Baa1 preferred) of Zurich Insurance Co. Ltd.
The agency says the rating review follows the improvement in the credit profile of the Zurich Group, especially with regard to capital adequacy, financial flexibility, high risk assets, and business diversification. Moody's sees a reduced risk in the future of material losses emanating from the group's non-core activities.
The agency says its review for possible upgrade would concentrate on the group's ability to sustain the improvement in its credit profile and, in particular, on the group's prospective economic and regulatory capital and financial flexibility position, together with cross-cycle profit potential.
Moody's places on review for possible upgrade the ratings of the Group's U.K. and German Life subsidiaries, Zurich Assurance Ltd. (A2 IFSR) and Zurich Deutscher Herold Lebensverischerung (A1 IFSR), together with the ratings of the Farmers Insurance Group (A2 IFSR).
Moody's affirms with a stable outlook the A3 IFSR of Kemper Investors Life Insurance Co. The rating affirmation and stable outlook were driven by ZIC's continued support of KILICO whose liabilities have been largely in runoff since 2003.
The following ratings were placed on review for possible upgrade: Zurich Insurance Co. Ltd.: A1 insurance financial strength rating; Zurich Insurance Co. Ltd. and guaranteed EMTN issuers: A2 senior unsecured debt, A3 subordinated debt, Baa1 capital note; Zurich Insurance Co. Ltd.: (P) A3 and (P) Baa1 EMTN Programme Type A Capital Notes, (P) Baa1 and (P) Baa2 EMTN Programme Type B Capital Notes; Zurich RegCaPS Funding Trust II, V & VI: Baa1 preferred stock rating; Zurich Finance Trusts I- V: Baa1 preferred stock rating; Zurich Assurance Ltd.: A2 insurance financial strength rating; Zurich Deutscher Herold Lebensverischerung AG: A1 insurance financial strength rating; ZC Specialty Insurance Co.: A2 insurance financial strength rating; Centre Reinsurance Ltd.: A2 insurance financial strength rating; Zurich Capital Markets Inc.: A1 issuer rating; ZCM Matched Funding Corp.: A1 Issuer rating; Espial Ventures Ltd.: A1 senior secured debt rating; Capstone Investments Ltd.: A1 senior secured debt rating; Argus Ventures Ltd.: A1 senior secured debt rating; Vista Investments Ltd.: A1 senior secured debt rating; Farmers Insurance Exchange: A2 insurance financial strength rating, Baa2 surplus notes; Farmers Insurance Company of Oregon: A2 insurance financial strength rating; Truck Insurance Exchange: A2 insurance financial strength rating; Fire Insurance Exchange: A2 insurance financial strength rating; Farmers Exchange Capital: Baa2 surplus notes; Zurich Bank: A1 long-term bank deposit rating, (P)A2 guaranteed senior debt EMTN program rating.
The following rating was affirmed with a stable outlook: Kemper Investors Life Insurance Co.: A3 insurance financial strength rating.
The following ratings were affirmed: ZCM Matched Funding Corp.: P-1 short-term issuer rating; Zurich Bank: P-1 short-term bank deposit rating, D- bank financial strength rating.
