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.

A.M. Best affirmed the financial strength ratings (FSR) and issuer credit ratings (ICR) of the property/casualty and life/health subsidiaries of American International Group Inc. (AIG). A.M. Best also affirmed the ICR of "bbb" of AIG. The outlook for all ratings is negative.

The ratings of the Chartis US Insurance Group, which is comprised of the commercial pool led by National Union Fire Insurance Company of Pittsburgh (NUFIC) and two entities that are significantly reinsured by NUFIC, and the Lexington Insurance Pool, led by Lexington Insurance Co. (Lexington), reflect their supportive level of risk-adjusted capitalization; their business profiles as leading global providers of commercial insurance and surplus lines products; operating results that are more in line with historical levels; reductions in exposure to natural and manmade catastrophes through underwriting actions; and improvement in customer retentions.

The ratings of AIU Insurance Co. recognize its supportive level of risk-adjusted capitalization, strong historic operating performance and the future benefits to be gained from the novation of its affiliated quota share reinsurance agreement, which suppressed underwriting and operating profits in recent years.

American General Property Insurance Co.’s ratings acknowledge its supportive level of risk-adjusted capitalization, offset by the company's limited business profile resulting from its decision to cease writing new policies.

The ratings of the SunAmerica Financial Group's domestic life and retirement services subsidiaries, collectively known as SunAmerica Financial Group (SAFG) are based upon its strong capital position, reduced volatility in operating performance and SAFG's ability to maintain a favorable market position despite organizational pressures in recent years, which stem from issues surrounding the group's ultimate parent, AIG.

The negative outlook recognizes the execution risk associated with the remaining steps in AIG's recapitalization plan, under which AIG will repay and terminate the Federal Reserve Bank of New York's credit facility, facilitate the orderly exit of the U.S. Government's interest in two special purpose vehicles and retire AIG's remaining TARP support and preferred shares. AIG's ICR acknowledges the support the company received from the U.S. Government, the sales and divestitures of its non-core businesses and the earnings generated by its diverse operations, including its global property/casualty insurance network, as well as its strong, well-established leadership positions in key U.S. insurance markets. The ICR also reflects the continued financial support of the U.S. Government as AIG works to meet various conditions that must be completed before final execution of its planned recapitalization, A.M. Best says.


Aspen Insurance Holdings Ltd. 

S&P assigned its preliminary 'BBB+' senior debt, preliminary 'BBB' subordinated debt, preliminary 'BBB-' junior subordinated debt, and preliminary 'BBB-' preferred stock ratings to Aspen Insurance Holdings Ltd.'s recently filed universal shelf registration program.

The ratings reflect the group's strong competitive position, strong enterprise risk management, strong operating performance, and strong capitalization, the rating agency says. Offsetting these strengths are the group's continued focus on growth, in particular in lines, which are under a degree of pricing pressure. In addition, the group has exposure to earnings volatility resulting from high-severity, low-frequency reinsurance lines.

The universal shelf program is intended to replace the existing facility, which is set to expire later this month. This new facility maintains the group's flexibility to issue securities quickly. That said, S&P does not expect management to draw down upon the facility in the near future.


AXA Insurance Ltd.

Moody's affirmed the Aa3 insurance financial strength rating of AXA Insurance Ltd., and changed the outlook of this rating to negative from stable. Based in Dublin, Ireland, AXA Insurance Ltd. is the Irish P&C operation of the AXA Group. All the other ratings of the AXA Group are unaffected by this rating action.

This rating action follows Moody's downgrade of Irish government bonds (to Baa1 from Aa2, negative outlook) and of several Irish banks, and reflects the increased uncertainty regarding Ireland's economic outlook and the potential negative impact of the severe economic crisis on the financial strength of AXA Insurance Ltd.

The affirmation of the rating mainly reflects the limited risk of deterioration of the stand-alone financial profile of the company in the short-term, notably thanks to a very limited exposure to Irish investments (including Irish government bonds and Irish bank debts), as well as the implicit support coming from the AXA Group (Aa3 IFSR, stable outlook, for its main insurance operations).


Catlin Re Switzerland 

S&P assigned its 'A' counterparty credit and financial strength ratings to Switzerland-based Catlin Re Switzerland (CRCH), a new insurance entity created as a subsidiary to Catlin Insurance Co. Ltd. (CICL; A/Stable). The outlook is stable.

The rating agency considers CRCH to be a core subsidiary of the Catlin Group, owing to its operational, strategic, and financial integration with the rest of the group, and the size of its capital base. CRCH will operate in Switzerland with a branch in Bermuda. The Swiss operation is a platform for the group to expand its foothold in the continental reinsurance market, which affirms S&P’s view of this subsidiary as core to group operations.

The ratings on CRCH reflect S&P’s view that the operations in the Bermuda branch will continue to be a core and integral part of Catlin's group structure, and that the new lines of business written in Europe will further strengthen the group's foothold in the continental market. CRCH will represent more than one-third of the group's capital base from inception, and will contribute almost half of group gross written premium over the next few years.

The stable outlook reflects the rating agency’s expectation that Catlin's competitive position will remain strong, driven by continued cycle management and implementation of the diversification strategy. Premium growth will primarily stem from the European lines of business in the early years, with the U.S. also playing a major role.


Fireman's Fund Insurance Co.

Moody's Investors Service has affirmed its A2 insurance financial strength (IFS) ratings of members of the Fireman's Fund Insurance Company intercompany pool (FFIC). The outlook for the ratings remains stable, consistent with the stable outlook on its parent, Allianz SE.

According to Moody's, the ratings on FFIC consider the company's intrinsic business and financial fundamentals as well as implicit and explicit support provided by its parent company, Allianz SE, one of the world's largest insurance groups (rated Aa3 for insurance financial strength). The A2 rating also recognizes FFIC's improved underwriting performance and business focus, its conservative investment profile and strong reinsurance protection, and its recognized brand identity in niche commercial (e.g. crop insurance) and high-end personal lines.

Factors that could result in a ratings' upgrade include: an explicit, unconditional and irrevocable guarantee from FFIC's parent company, Allianz, and/or an upgrade of Allianz's ratings; or FFIC's demonstrated ability to sustain improved operating results through the industry down cycle, together with substantial and sustained improvement in the group's risk-adjusted capitalization. Conversely, factors that could result in a rating downgrade include: deterioration of the financial strength and/or rating of Allianz, a reduction in implied and explicit forms of capital support from Allianz, or an erosion of Fireman's Fund's capital and surplus in excess of 10% over the course of a 1-year period, gross underwriting leverage above six times, or a combined ratio consistently above 110%.


First American Title Insurance Company of New York

A.M. Best withdrew the financial strength rating (FSR) of A- (excellent) and issuer credit rating (ICR) of “a-” of First American Title Insurance Company of New York, a former affiliate of First American Title Insurance Co. (FATICO). At the same time, A.M. Best assigned an NR-5 (Not Formally Followed) to the FSR and an “nr” to the ICR.

As of Sept. 22, 2010, First American Title Insurance Company of New York was merged into FATICO, which is a member of the First American Title Insurance Group.


Great-West Lifeco

Fitch Ratings downgraded the ratings of Great-West Lifeco (GWO) by one-notch including the holding company's issuer default rating (IDR) to 'A+' from 'AA-' and all outstanding senior debt and hybrid issues, as well as the insurer financial strength (IFS) ratings of all operating subsidiaries to 'AA' from AA+'. The rating outlook is stable. A complete list of rating actions follows at the end of this release.

The action follows a periodic review of GWO's ratings, and is based mainly on ongoing underperformance of Putnam Investments (Putnam), which has strained overall earnings levels and has caused fixed charge coverage to remain at depressed levels for some time.

GWO's ratings remain among the highest in Fitch's life insurance ratings universe. Fitch views positively GWO's consistently strong and stable core insurance earnings performance as it drives and supports the company's financial flexibility and consolidated risk-based capital position. Fitch believes this performance is reflective of the company's conservative risk appetite, which has resulted in lower-risk product design, strict pricing discipline and management of key earnings drivers such as expenses and persistency.


Health Net Inc. and subsidiaries

A.M. Best upgraded the financial strength rating to B++ (good) from B+ (good) and issuer credit ratings (ICR) to “bbb” from “bbb-” for Health Net of California Inc., Health Net Life Insurance Company, Health Net Health Plan of Oregon Inc. and Health Net of Arizona Inc.

A.M. Best also upgraded the ICR to “bb” from “bb-” for the parent company, Health Net, Inc. (Health Net). Additionally, the rating agency upgraded the debt rating to “bb” from “bb-” on $400 million senior unsecured notes at 6.375% due 2017 of Health Net. The outlook for all the above ratings has been revised to stable from negative.

The upgrading of the ratings of Health Net’s insurance entities reflects the improved profit margins, diversified earnings sources that include government and state-sponsored business, and their strategic importance to Health Net by providing managed care products in the Arizona, California and Oregon markets. The commercial segment margins have improved as Health Net priced its products above claims trends and it has re-priced unprofitable accounts.


Lloyd's of London

Fitch Ratings affirmed Lloyd's of London's (Lloyd's) insurer financial strength (IFS) rating at 'A+'. Fitch also affirmed the Society of Lloyd's Long-term issuer default rating (IDR) at 'A', and affirmed Lloyd's Reinsurance Co. (China) Ltd.'s IFS rating at 'A+'. All three ratings have stable outlooks. Fitch has additionally affirmed Lloyd's subordinated debt issues, as detailed at the end of this comment, at 'BBB+'.

The rating affirmation reflects the strong financial profile of Lloyd's and robust operating performance so far during 2010, which has been achieved against an uptick in major loss events in H110, Fitch says. The rating action also reflects expectations that Lloyds' FY2010 results will exceed the agency's earlier forecast, which anticipated FY2010 net income of GBP1.75bn. Lloyd's strong capital position and the conservative allocation of both several and mutual assets are also viewed as positive rating factors.


Lodestone Re Ltd.

S&P assigned its 'BB+(sf)' and 'BB(sf)' ratings to the Series 2010-2 Class A-1 and Class A-2 notes, respectively issued by Lodestone Re Ltd.

The notes are exposed to losses from U.S. hurricanes and earthquakes in the covered area. The Class A-1 notes have an original principal balance of $125 million, and for the Class A-2 notes, it is $325 million. Each class has a scheduled maturity date of Jan. 8, 2014, and a legal final maturity date of Jan. 9, 2017. The proceeds from the sale of the notes will be invested in eligible U.S. money market funds rated 'AAAm-g' and will pay interest equal to the yield on these funds plus 6.00% for the Class A-1 notes and 7.25% for the Class A-2 notes.

This is the second series issued in 2010 by Lodestone Re. Each series covers the same perils (U.S. hurricanes and earthquakes, and covered areas), the only differences being the attachment and exhaustion points.

At issuance, the Series 2010-2 Class A-1 notes have the same risk profile (attachment and exhaustion points) as the Series 2010-1 Class A notes and have the same rating. One difference between the two notes is that the 2010-2 Class A-1 notes will have a probability of attachment of 1.13% and an expected loss of 0.95% versus 1.14% and 0.96%, respectively, for the Series 2010-1 Class A notes. The 1 basis point difference is a result of simulation error in the modeling process, and S&P does not consider it to be significant. As a result, at each annual reset, the Series 2010-2 Class A-1 notes may reset to a slightly lower attachment point than the 2010-1 Class A notes because the Series 2010-2 Class A-1 notes have a lower probability of attachment.


Mutual of America Life Insurance Co.

Fitch Ratings affirmed the 'AA-' insurer financial strength (IFS) rating of Mutual of America Life Insurance Co. (MOA). The rating outlook is stable.

The action follows Fitch's updated review of MOA's capitalization, operating results, liquidity and financial flexibility. MOA's rating continues to be based on the company's extremely strong balance sheet fundamentals and its established niche position in the small- and medium-sized not-for-profit pension market.

MOA has very strong risk-based statutory capitalization, low operating leverage and no financial leverage, Fitch says. The rating agency estimates the company's NAIC RBC ratio and operating leverage to be approximately 450% and 8x, respectively, at Sept. 30, 2010.

Fitch notes that MOA was able to maintain relatively stable statutory capital levels throughout the financial crisis without having to raise new capital via the capital or reinsurance markets. The relative stability of MOA's statutory capitalization was due in part to the company's favorable investment loss experience, which benefited from the company's minimal exposure to structured finance securities and the decision to significantly reduce equity exposure in early 2008 ahead of the market downturn. MOA's results also benefit from the absence of living and death benefit guarantees and related reserve volatility in its pension annuity business.


Partners Mutual Insurance Co.

A.M. Best downgraded the financial strength rating to B (fair) from B+ (good) and issuer credit rating to “bb” from “bbb-” of Partners Mutual Insurance Co. (Partners). The outlook for both ratings has been revised to stable from negative.

These rating actions reflect Partners’ trend of deteriorating underwriting performance, elevated expense structure, declining policyholders’ surplus and geographic concentration of risks that exposes it to severe weather-related events. Offsetting these negative rating factors are the company’s long-standing agency relationships and strategy to improve underwriting results.


Principal Financial Group Inc. 

Fitch Ratings affirmed the ratings of Principal Financial Group Inc. (PFG) and its subsidiaries. The affirmation includes the insurer financial strength (IFS) ratings of PFG's primary life insurance company subsidiaries at 'AA-' and its holding company senior debt rating at 'A-'. A full list of rating actions follows at the end of this release. The rating outlook remains negative.

This rating action follows a periodic review of PFG's financial results and credit quality. Fitch views PFG's strong market position in the employee benefit business as favorable to the company's operating profile. Operating earnings, particularly in PFG's important pension business, are improving a trend that is expected to continue in 2011. However, PFG's overall operating earnings profile has diminished somewhat from levels achieved prior to the financial crisis. This longer-term decline in earnings profile is due to margin pressure in the pension business, a scale-back in the institutional spread-based business and reduced fees for asset management operations.

Fitch's negative outlook reflects the previously mentioned longer-term earnings challenges as well as continued uncertainty in the level of losses that will ultimately be attributed to PFG's investment portfolio. The uncertainty particularly applies to the concentration in commercial mortgage backed securities where the amount of gross unrealized losses in the remains sizable. Fitch notes that PFG has increased financial resources and financial flexibility that can be used to help mitigate potential investment losses.

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