A.M. Best Co. affirmed the financial strength rating (FSR) of A (excellent) and issuer credit ratings (ICR) of “a” of Argo Re Ltd. (Argo Re) and its subsidiaries. A.M. Best also affirmed the ICR of “bbb” and debt ratings of the parent holding company, Argo Group International Holdings, Ltd. (Argo Group). The outlook for all ratings is stable.
These ratings consider Argo Group’s first quarter earnings announcement, and take into account Argo Re’s supportive capitalization, experienced management team, product expertise in niche focus areas and the historical profitability at Argo Re’s subsidiaries. The U.S. specialty operations are managed holistically with respect to capital, investment strategy and market presence. Argo Re, as the lead insurer, also assumes risk via quota share reinsurance agreements with its subsidiaries.
A.M. Best Co. revised the outlook to stable from negative and affirmed the FSR of A- (excellent) and ICR of “a-” of Beneficial Life Insurance Co.
The ratings reflect Beneficial Life’s strong capitalization, positive operating earnings and demonstrated support through its affiliation with The Church of Jesus Christ of Latter-day Saints. A.M. Best did not review the financials statements of The Church or Deseret Management Corp.’s (DMC) immediate parent, DMC Reserve Trust, but the rating agency did review the 2009 audited financials of Beneficial Life’s immediate parent DMC, which provided the cash capital infusions into Beneficial Life.
Fitch Ratings affirmed Bupa Insurance Ltd's (BIL) insurer financial strength (IFS) rating at 'A+' and long-term issuer default rating (IDR) at 'A'. Fitch also affirmed BIL's GBP330m subordinated perpetual bond, issued by holding company, Bupa Finance plc, at 'BBB+' as this issue is guaranteed by BIL on a subordinated basis. The outlooks on the IFS rating and long-term IDR are stable.
The affirmation and stable outlook primarily reflect BIL's strong and stable underwriting profitability, which has held up comparatively well in the recessionary environment, the rating agency says. While the UK portion of BIL's insurance book experienced a slight deterioration in underwriting performance during 2009, with the loss ratio increasing to 82.9% at YE09 compared with 80.7% at YE08, BIL's international business remains very profitable.
Moody’s Latin America has assigned a global local-currency IFS rating of B1 and a Aa3.ar IFS rating on Argentina's national scale to Consolidar Aseguradora de Riesgos del Trabajo S.A. (Consolidar ART). The outlook for these ratings is negative.
Consolidar ART is a leading monoline workers’ compensation insurer majority-owned by Spain-based Banco Bilbao Vizcaya Argentaria (BBVA) and its local subsidiary in Argentina: BBVA Banco Frances, Moody’s says. According to the rating agency, Consolidar ART's ratings primarily reflect its stand-alone credit profile, as well as its ownership by the large international BBVA group.
S&P revised its outlook on Friends Provident Group PLC, the U.K.-based holding company of the Friends Provident (FP) insurance group, and its main insurance operating subsidiary, Friends Provident Life and Pensions Ltd. to negative from stable. At the same time, the rating agency affirmed the 'BBB' and 'A-' IFS and counterparty credit ratings, respectively.
The outlook revision follows the announcement that Resolution Ltd., the ultimate owner of FP, is in discussion with AXA (A/Stable/A-1) to acquire a large part of AXA U.K. life business.
S&P believes there is considerable uncertainty whether FP will be able to maintain its competitive position if the deal is unsuccessful, and management will struggle to achieve its financial objectives without increasing the scale of its U.K. insurance operations. Failure to execute the acquisition, in particular if this results from a lack of investor support, could lead to a review of the group's strategic options, the rating agency says.
S&P assigned its 'BBB' rating on Genworth Financial Inc.'s (GNW) issuance of $400 million in senior notes. At the same time, the rating agency affirmed the 'BBB' long-term counterparty credit rating on GNW and 'A' counterparty credit and FSRs on GNW's life insurance operations (collectively referred to as Genworth). The outlook remains stable.
The $400 million debt issuance represents GNW's latest transaction in a string of capital-raising initiatives, which have brought in approximately $2.0 billion in fresh capital to the holding company during the past 12 months, S&P says. Some of the efforts to raise capital have resulted in $622 million in common equity, approximately $700 million in proceeds from the Canadian mortgage insurance IPO, and $700 million in senior notes.
A.M. Best affirmed the FSR of A+ (superior) and ICRs of “aa” of Great-West Life Assurance Co. (GWL) and its wholly owned core subsidiaries, London Life Insurance Co. (London Life), The Canada Life Assurance Co. (Canada Life), Great-West Life & Annuity Insurance Co. (GWL&A) and its N.Y. marketing arm, First Great-West Life & Annuity Insurance Co. (FGWL&A). Concurrently, A.M. Best downgraded the ICR to “a” from “a+” of Great-West Lifeco, Inc. (Great-West) as well as the existing debt ratings of Great-West. The rating downgrade is not reflective of a weakening financial condition, but rather reflects a revision to standard notching for holding companies in accordance with A.M. Best's published debt rating methodology.
The rating affirmations are based on Great-West’s operating companies’ very strong market positions in core business lines, historically strong operating fundamentals and favorable financial performance. Additionally, through strategic acquisitions and over time, the group has achieved significant and sustainable scale advantages in core business lines in Canada and the United States. Additionally, Great-West’s diversified insurance, reinsurance and financial services operations along with its strong enterprise risk management capabilities have enabled it to manage through recent adverse economic conditions with only a modest impact to its overall performance and financial strength.
A.M. Best revised the outlook to stable from negative and affirmed the FSR of A (excellent) and ICR of “a” of Mercer Insurance Group (Mercer). The ratings apply to the following four inter-company reinsurance pool members: Mercer Insurance Co., Mercer Insurance Co. of New Jersey Inc., Franklin Insurance Co. and Financial Pacific Insurance Co. (FPIC), Concurrently, A.M. Best revised the outlook to stable from negative and affirmed the ICR of “bbb” of Mercer Insurance Group Inc.
The revised outlook reflects Mercer’s improved level of capitalization in 2009 as surplus grew due to profitable after-tax operating results, a capital contribution from its parent and a decrease in the group’s non-admitted deferred tax assets. In addition, the equity in the group’s fixed income portfolio significantly improved during the year, further bolstering economic capital.
The ratings reflect Mercer’s favorable capitalization, solid operating performance and conservative management philosophy. The group continues to record favorable underwriting results, which have been an important driver of strong pre-tax returns on both revenue and surplus that either meet or exceed industry peers.
Moody's downgraded the senior debt rating of The Phoenix Cos. Inc. to B3 from B1. In the same rating action, the IFS rating of the company's life insurance subsidiaries, led by Phoenix Life Insurance Co. (Phoenix Life), was downgraded to Ba2 from Ba1 and the debt rating on Phoenix Life's surplus notes was downgraded to B1 from Ba3. The outlook on Phoenix and its life insurance subsidiaries was changed to stable from negative.
Moody's said the rating downgrades of Phoenix and its operating companies were driven primarily by the group's relatively weak capital position, which exacerbates the company's limited financial flexibility; expectation for modest earnings in the near to medium term; and the company's diminished market position.
S&P lowered the FSR on Progressive Direct Insurance Co. (Australian Branch) to 'AA' from 'AA+' and revised the outlook to stable from negative.
This rating change represents an error correction to align the Australian branch rating with that on the core property/casualty insurance operating subsidiaries of U.S.-based Progressive Corp., which were lowered on June 10, 2010. The rating action reflected a decrease in the operating companies' capital adequacy to the strong level from very strong, as well as the group's vulnerability to earnings volatility from investment market exposure. Supporting the ratings on Progressive Corp. are its very strong competitive position and well-recognized franchise as the fourth-largest automobile writer in the United States, among other factors.
S&P assigned its 'A' senior unsecured debt ratings on two Prudential Financial Inc. (PRU) medium-term note, series D issues totaling $1 billion. The issuances are $650 million of 5.375% notes due in 2020 and $350 million of 6.625% notes due in 2040.
The senior unsecured issue ratings reflect S&P’s 'A' counterparty credit rating on PRU. The counterparty credit rating on PRU reflects a nonstandard two-notch gap from the core insurance operating company ratings. The nonstandard notching reflects PRU's diverse sources of earnings from regulated U.S. and international insurance operations, as well as asset management subsidiaries, which are largely unrestricted, the rating agency says.
The ratings on PRU and its insurance operating companies reflect the group's strong competitive positions in the United States and Japan as well as the capitalization, liquidity, and financial flexibility of the U.S. insurance operating companies. The stable outlook reflects S&P’s expectation that PRU will maintain its very strong competitive position, accompanied by very strong operating earnings and capital adequacy.
A.M. Best revised the outlook to negative from stable and affirmed the FSR of A+ (superior) and ICR of “aa-” of State Auto Insurance Cos. and its members. Concurrently, A.M. Best revised the outlook to negative from stable and affirmed the ICR of “a-” and debt rating of “a-” on $100 million 6.25% senior unsecured notes, due 2013 issued by State Auto Financial Corp. (STFC).
The negative outlook reflects State Auto’s recent surplus declines and deterioration in underwriting and operating earnings, A.M. Best says. Factors contributing to this result include increased frequency and severity of catastrophe losses and unrealized capital losses in recent years.
The affirmation is supported by State Auto’s strong capitalization, generally favorable operating results and excellent regional market franchise.
Westpac Lenders Mortgage Insurance
Moody's assigned a first-time insurance FSR of Aa3 to Westpac Lenders Mortgage Insurance Ltd. (WLMI). The rating outlook is negative.
The rating considers the amount of support—including capital and other forms—available to WLMI from its parent, Westpac Banking Corp. (Westpac), as well as the strong stand-alone credit profile of WLMI itself, according to Moody’s.
As a captive insurer, WLMI provides lenders mortgage insurance coverage only to Westpac's loan portfolio. Westpac in turn benefits from an independent review of its risk acceptance process and has access to a risk transfer mechanism to effectively manage its housing loan risk profiles.
Further, due to the bank's conservative underwriting profile, resulting in low claim levels, WLMI has been able to retain profits, which would otherwise flow to an external provider.
