S&P revised its CreditWatch implications on its 'A-' financial strength rating on AIG United Guaranty Insurance (Asia) Ltd. (AIG UGI Asia) to developing from negative, where it was placed on April 8, 2009.
The revised CreditWatch implications reflect S&P’s view of the potential that the rating could be raised to 'A' with a stable outlook, presuming that AIG UGI Asia's explicit support structure is finalized, and it conforms with S&P’s group methodology criteria. Alternatively, absent this support, S&P could lower the rating to 'BB' and revise the outlook to stable, which would reflect AIG UGI Asia's stand-alone credit profile.
AIG UGI Asia is a relatively new mortgage insurance company with modest market positions in the developing Hong Kong and Korean mortgage insurance markets. The company's risk in force is about $371 million, with $154 million in Hong Kong and $217 million in Korea. While the company has been profitable during the last several years, there are originator, product and country concentrations; and the ultimate attainment of critical mass and acceptable profit levels are uncertain. AIG UGI Asia's gross premiums written were less than $2 million for full years 2010 and 2009.
A.M. Best has affirmed the financial strength rating (FSR) of A++ (Superior) and issuer credit ratings (ICR) of “aa+” of Auto-Owners Insurance Group (AOIG) and its members. AOIG is comprised of five property/casualty companies led by Auto-Owners Insurance Co. (Auto-Owners) and its four wholly owned subsidiaries.
Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and ICR of “aa-” of Auto-Owners Life Insurance Co., a wholly owned subsidiary of Auto-Owners. The outlook for all ratings is stable.
The ratings reflect AOIG’s superior capitalization, trend of solid operating income, experienced management team, commercial and personal product offerings and long-standing agency relationships. In addition, the group possesses strong risk management techniques and a well-established market position.
Fitch has assigned an 'A+' rating to the following senior secured bonds of the Citizens Property Insurance Corp., Coastal Account (formerly known as the High Risk Account):
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In addition, Fitch has assigned an 'F1+' rating to the following senior secured bonds:
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The bonds are expected to be offered via negotiation the week of June 27, 2011, with the final structuring to be determined at pricing.
The rating outlook is stable.
Fitch also has assigned an 'A+' rating, stable outlook, to the following outstanding bonds of the Citizens Property Insurance Corp.:
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The Issuer Default Rating (IDR) of 'A-', positive outlook is withdrawn. Going forward, Fitch's ratings on Citizens' debt will apply to specific bonds, and no IDR will be maintained. This change is made in conjunction with the publication of updated criteria for rating assessment secured debt, issued by state-sponsored insurers in April 2011, and the transition of lead coverage for this credit from Fitch's Insurance Group to the Public Finance Group.
The rating, which is higher than the withdrawn IDR rating of 'A-', primarily reflects an increased emphasis on the security derived from Citizens' ability to levy emergency assessments on nearly every insurance policyholder in the state for an unlimited duration, and in an unlimited cumulative amount, to pay debt service on its bonds.
Fitch has upgraded the ratings assigned to CNO Financial Group Inc.'s debt. In addition, Fitch has affirmed the Issuer Default Rating (IDR) and the Insurer Financial Strength (IFS) ratings assigned to CNO Financial and its subsidiaries. The rating outlook for the holding company and insurance subsidiaries is revised from stable to positive.
The rating action reflects the successful actions CNO Financial has taken to improve its capital structure and earnings profile, and improve its financial flexibility. The rating action also considers the stabilized economic environment and improved financial markets, which has had a positive impact on CNO Financial's investment results and portfolio valuation. The company's earnings before interest and taxes increased 7% to $361 million in 2010, and 28% to $101 million in the first quarter 2011.
Fitch believes the emerging stability of CNO Financial's earnings and ability to manage losses in its investment portfolio have played important roles in the company's ability to avoid covenant violations. The company now has produced positive quarterly net income for more than two years. Fitch expects the GAAP adjusted interest coverage ratio to be in the 5 times (x) range in 2011, after reaching 4.7x in 2010. The ratio is adjusted to only include interest on corporate debt.
A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of First American Title Insurance Group and its member companies. A.M. Best also has affirmed the ICR of “bbb-” of the parent holding company, First American Financial Corp. The outlook for all ratings is stable.
The ratings reflect First American’s significant market presence within the title industry as well as its significantly improved underwriting leverage measures. The group maintains a strong franchise value and benefits from the financial flexibility and operational support from First American Financial Corp., which maintains modest financial leverage. First American’s underwriting leverage measures improved significantly in recent years, due to surplus growth combined with declining premium volume.
These positive rating factors are somewhat offset by the First American’s challenging operating environment, which is reflective of ongoing profitability concerns, due to a significant softening in real estate markets that has impacted negatively title premium revenues in recent years. While the group’s revenue and profitability were negatively impacted in 2008, due to the prevailing economic environment, operating results rebounded in 2009 and 2010. This was due mainly to cost reduction initiatives as First American focused on managing the real estate down cycle. In addition, the group took significant reserve-strengthening actions in recent years, due to unfavorable loss development in prior policy years.
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings of “aa-” of Jackson National Life Insurance Co., its wholly owned subsidiary, Jackson National Life Insurance Co. of New York (together known as JNL), and its direct parent, Brooke Life Insurance Co. Additionally,
A.M. Best has affirmed the debt ratings of “aa-” on the notes issued under JNL’s funding agreement-backed securities (FABS) programs and the debt rating of “a” on its existing $250 million 8.15% surplus notes. The outlook for all ratings is stable.
The ratings reflect JNL’s strong market position in the individual annuity arena, solid-risk adjusted capitalization and profitable operating results. During the last few years, the company has increased substantially the market share of its core variable annuity product line through the expansion of multiple distribution outlets. In addition, JNL has experienced favorable variable annuity net flows during this time. While A.M. Best notes that the company’s earnings are highly correlated with the performance of the equity markets, the ratings acknowledge JNL’s strong risk-management capabilities, including asset/liability matching and the hedging of most of its variable annuity guarantees, which have protected its liquidity and surplus positions throughout the recent financial crisis.
JNL’s ratings also consider the financial strength and support of its ultimate parent, Prudential plc, which is one of the largest insurers in the United Kingdom and among the world’s leading financial services organizations. JNL is a material contributor to the group’s revenue and earnings, and as such, Prudential plc historically has provided support to JNL through capital contributions and internal reinsurance.
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of the domestic life/health insurance companies of Prudential Financial Inc. (PFI). Concurrently, A.M. Best has affirmed the ICR of “a-” of PFI and all existing debt ratings of the group. All domestic life/health companies of PFI collectively are referred to as Prudential. The outlook for all ratings is stable.
The affirmation of the ratings reflects Prudential’s strong market position in its diversified businesses, solid liquidity and capitalization led by improved operating performances in most of its business segments, and prospects for continued organic growth. A.M. Best notes steady net flows and continued strong persistency within PFI’s retirement business, record additions within institutional asset management, as well as strong top-line revenue growth within variable annuities and international life insurance.
A.M. Best observes that Prudential’s equity market risk is lower, given a higher proportion of variable annuities with automatic rebalancing features, and Prudential’s recent acquisition of Star Edison, which increases its Japanese life-related business. In addition, the company’s investment portfolio continues to demonstrate positive trends, with respect to impairments, and remains in a net unrealized gain position. The company’s first-quarter 2011 results continue to evidence positive momentum, with Prudential garnering solid, top-line revenue results from its diversified business profile, particularly from sales of its highly successful U.S. variable annuity product, strong growth within its bank channel distribution, and moderate growth within the Gibraltar Life advisor channel in Japan. Furthermore, Prudential continues to demonstrate strong enterprise risk-management practices with prudent use of hedging, reinsurance and product design techniques.
S&P raised its counterparty credit and financial strength ratings on Standard Life Assurance Co. of Canada to 'A+' from 'A'. The outlook is stable.
The upgrade reflects Standard Life Canada's greater significance to the Standard Life PLC group, and its status change to core from strategically important under S&P group methodology. This improvement is supported by Standard Life Canada's long history and leadership position in the Canadian group pension market. Underpinning the ratings are the company's strong earnings profile, very strong capital adequacy, conservative investment portfolio, and strong financial flexibility. In addition, the ratings also benefit from the earnings diversity that Standard Life Canada's disability income segment operations provide, as well as the implied and demonstrated support of Standard Life Assurance Ltd. (A+/Stable/A-1), which is one of the largest life insurance groups in the United Kingdom. S&P views Standard Life Canada as a core subsidiary of the Standard Life PLC group.
Within S&P’s group methodology criteria, the service caps the counterparty credit and financial strength ratings on a strategically important subsidiary at one notch below the ratings on the group, unless the stand-alone characteristics of that subsidiary merit higher ratings. The financial strength ratings on core subsidiaries are equalized with the ratings on notional group operating company.
S&P assigned its 'A-' counterparty credit and financial strength ratings on Rockhill Insurance Co., Plaza Insurance Co., Bloomington Compensation Insurance Co., and American Compensation Insurance Co. The outlook on these companies is stable, reflecting the outlook on State Auto Group.
S&P says that, based on our group methodology, the service considers these four subsidiaries core to their parent. Therefore, S&P rates them the same as the other core insurance subsidiaries of State Auto Group.
In S&P’s opinion, State Auto Group has demonstrated a strong commitment to Rockhill Insurance, Plaza Insurance, Bloomington Compensation Insurance, and American Compensation Insurance. State Auto acquired the four companies in 2009. The companies became part of State Auto Group's intercompany reinsurance pooling agreement on Jan. 1, 2011. As a result, all of the business that the four subsidiaries write is ceded to the pool without any retrocession back to the subsidiaries.
A.M. Best has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and issuer credit rating (ICR) to “a” from “a-” of State Farm General Insurance Co. (State Farm General). The outlook for both ratings has been revised to stable from positive.
In addition, A.M. Best has affirmed the FSRs of A++ (Superior) and ICR of “aa+” of State Farm Group and its members, as well as State Farm Life Group (State Farm Life) and its members. Concurrently A.M. Best has affirmed the FSRs and ICR of State Farm Fire and Casualty Co., State Farm Lloyds, State Farm Indemnity Group and its member, and State Farm International Life Insurance Co. Ltd. The outlook for these ratings is stable, except for the outlook of State Farm Indemnity Group, which is negative.
The rating upgrades for State Farm General are based on its strong risk-adjusted capitalization, favorable earnings trend, excellent business profile and the company’s strategic importance to its parent, State Farm Mutual Automobile Insurance Co. (State Farm Mutual). The ratings also benefit from the explicit support State Farm General receives from State Farm Mutual.
Zenith National Insurance Capital Trust I
Moody's has withdrawn the Ba1 (hyb) rating on the $38.5 million of capital securities of Zenith National Insurance Capital Trust I (Capital Trust), following the redemption of the securities and their exchange for internal subordinated debentures (unrated by Moody's) previously issued to the Capital Trust by Zenith National Insurance Corp.
Zenith National Insurance Corp., an indirect wholly owned subsidiary of Fairfax Financial Holdings Ltd., provides workers' compensation insurance through its insurance subsidiaries. It specializes in insuring small- and medium-sized businesses, and writes around 80% of its business in the states of California and Florida, with the majority in California.
