Farmers Mutual Fire Insurance Company of Branch County
A.M. Best downgraded the financial strength rating (FSR)to C++ (marginal) from B (fair) and issuer credit rating (ICR) to “b” from “bb” of Farmers Mutual Fire Insurance Company of Branch County (Farmers Branch). The outlook for both ratings is negative.
The rating actions reflect Farmers Branch’s long-term trend of unfavorable operating results and the significant deterioration in its capital over the past several years, A.M. Best says.
Declining premium writings, coupled with several years of significant fire and liability related losses, resulted in underwriting losses and drove the company’s three consecutive years of surplus decline. In addition, Farmers Branch’s expense position has remained elevated over the past five years and continues to strain overall profitability. The company’s single state risk concentration makes it susceptible to regulatory and competitive pressures and severe weather-related losses.
The rating outlook is based on the potential for continued deterioration of capital and disruption of the company’s operating strategies. Although management has undertaken actions to improve overall results, there is uncertainty regarding the ultimate success of those initiatives.
Moody's assigned a provisional (P)Baa3 issuer rating to First American Financial Corp., which is the new holding company for the First American Title Insurance Group. In the same action, Moody's assigned a (P)Baa2 rating to the company's senior secured revolving credit facility. First American Financial Corp., along with its title insurances subsidiaries, is expected to be spun out of The First American Corp. by June 1, 2010, pending regulatory approval. Moody's continues to maintain A3 insurance financial strength (IFS) ratings on First American's title insurance subsidiaries. The outlook for the ratings is stable.
The provisional ratings are prospective in nature and are based on the assumption that FAF will complete the planned spin-off of its financial services businesses into a separate public company. Upon completion of the spin-off, the new company, First American Financial Corp., will be a holding company for the group's title insurance and specialty insurance operating subsidiaries.
A.M. Best downgraded the FSR to B (fair) from B+ (good) and ICR to “bb+” from “bbb-” of Great Northwest Insurance Co. (GNIC). The outlook for the FSR has been revised to stable from negative, while the outlook for the ICR is negative.
Concurrently, A.M. Best upgraded the FSR to B+ (Good) from B (Fair) and the ICR to “bbb-” from “bb” of Hawaiian Insurance and Guaranty Co. Ltd. (HIG). The outlook for these ratings is stable.
A.M. Best also has affirmed the ICR of “b” of both companies’ common parent, GNW Acquisition Corp. (GNWAC). The outlook for this rating is stable.
The rating downgrades for GNIC are based on the challenges associated with having a material portion of its book of business in catastrophe-prone states, which led to its current underwriting volatility, A.M. Best says. The ICR outlook is supported by GNIC’s operating performance over the last three years, which has seen a 32% decrease over year-end 2006's capital base. The company is challenged to stem the volatility within its book of business in the near term.
HIG’s rating upgrades are based on the company’s experienced management team, unique operating/distribution strategies, operational profitability and capitalization.
Partially offsetting these positive factors are the challenges that HIC faces as a single state writer in a catastrophe prone area, most specifically those of competition, economic scarcity inherent in an island economy and regulatory changes. The rating outlook is based on HIG’s recent operating performance, as well as its capitalization.
International General Insurance Co. Ltd. and
A.M. Best affirmed the FSR of A- (excellent) and ICR of “a-” of International General Insurance Co. Ltd. (IGI). A.M. Best also affirmed the ICR of “bbb-” of International General Insurance Holdings Ltd. (IGIH). The outlook for all ratings is stable.
The ratings reflect IGI’s resilient risk-adjusted capitalization, improved financial performance and developing risk management framework, A.M. Best says. An offsetting factor is IGI’s potential volatility in financial performance in light of its projected plans and changing business profile pertaining to new business lines.
A.M. Best assigned an FSR of A- (excellent) and an ICR of “a-” to Kansas Medical Mutual Insurance Co. (KaMMCO). The outlook assigned to both ratings is stable.
The ratings reflect KaMMCO’s strong risk-adjusted capital position, long-term and consistent record of favorable operating performance and its dominant market position as the leading writer of medical professional liability insurance (MPLI) in Kansas, the rating agency says.
Moody's downgraded the insurance financial strength rating (IFSR) for Legal & General Assurance Society Ltd. (LGAS) to Aa3 from Aa2 and the IFSR for Legal & General Insurance Limited to A2 from A1. Moody's also downgraded the ratings of Legal & General Group (L&G) Plc (senior unsecured debt to A3 from A2, subordinated debt to Baa1 from A3 and preferred securities to Baa2 from Baa1). Moody's also downgraded the short-term rating for commercial paper of Legal & General Finance PLC to Prime-2 from Prime-1.
Moody's downgrade of the Group's ratings primarily reflects the rating agency’s negative view on the UK life market and L&G's reliance on this market for the vast majority of its business.
S&P affirmed its 'BBB-' counterparty credit rating on Liberty Mutual Group Inc. (LMGI). At the same time, the rating agency affirmed its 'A-' FSRs on the members of the Liberty Mutual Intercompany Pool and the Liberty Insurance Holdings Intercompany Pool, as well as other rated insurance affiliates (collectively, Liberty). The outlook on all of these ratings remains stable. In addition, S&P its 'BBB-' senior unsecured debt rating, 'BB' junior subordinated debt rating, and 'A-2' commercial paper rating on LMGI and affirmed its 'BBB' subordinated debt rating on Liberty Mutual Insurance Co.
The affirmations follow Liberty's announcement that its subsidiary, Liberty Mutual Agency Corp. (LMAC), consisting of substantially all of its current business underwritten within the Agency Markets strategic business unit, has filed a registration statement with the SEC for an IPO of shares of its common stock, S&P says
S&P lowered its counterparty credit and senior unsecured debt ratings on Los Angeles-based Mercury General Corp. to 'BBB+' from 'A-'. S&P also lowered its counterparty credit and FSRs on Mercury Casualty Co. and Mercury Insurance Co. to 'A+' from 'AA-' and its FSR on Mercury Insurance Co. of Florida to 'A+' from 'AA-'. In addition, the rating agency lowered its counterparty credit and FSRs on California Automobile Insurance Co. to 'A' from 'A+'. All of these companies are units of Mercury General Corp. The outlook is stable.
The downgrades reflect S&P’s opinion that Mercury has made slow strategic and operational progress in achieving profitable expansion outside of its home state of California.
A.M. Best Co. affirmed the FSR of A (excellent) and the ICR of “a” of New Zealand Local Government Insurance Corp. Ltd. (Civic Assurance). The outlook for both ratings is stable.
The rating affirmations are based on Civic Assurance’s solid risk-adjusted capitalization and ongoing operating profitability, A.M. Best says. The ratings also acknowledge the company’s strategic initiative with its administrated trust fund, New Zealand Local Authority Protection Programme Disaster Fund (LAPP).
S&P revised its outlook on Pennsylvania National Mutual Casualty Insurance Co. and its affiliates—Penn National Security Insurance Co. and Founders Insurance Co.—to negative from stable. S&P also affirmed its 'BBB+' counterparty credit and FSRs on these companies (collectively referred to as Penn National).
The revised outlook reflects Penn National's deteriorated underwriting results in 2009 compared with historical levels, the rating agency says. For example, Penn National's 2009 statutory combined ratio was 103% compared with 99.9% in 2008. In addition, the group's underwriting results continued to deteriorate in the first quarter of 2010, with the statutory combined ratio increasing significantly to 110.6% compared with 104.3% for the same period in 2009.
Real State Insurance Co.
A.M. Best affirmed the FSR of B++ (good) and ICR of “bbb+” of Real State Insurance LLC. The outlook for both ratings is stable.
The ratings reflect Real State’s good capitalization level and favorable operating experience as well as its role as the captive insurance company for EOP Operating Limited Partnership (EOPOLP), A.M. Best says. Real State also insures Blackstone affiliates, CarrAmerica Realty Operating Partnership, L.P., TRZ Holdings LLC and Blackstone real estate advisor’s office portfolio. Also, the property insurance retention was lowered to $50 million from $75 million.
Rural Community Insurance Co.
A.M. Best affirmed the FSR of A (excellent) and ICR of “a” of Rural Community Insurance Co. (RCIC). The outlook for both ratings is stable.
The ratings reflect RCIC’s superior capitalization, historically solid operating performance and the benefits derived from its leading presence within the multi-peril crop insurance (MPCI) industry, A.M. Best says. In addition, significant financial flexibility and operating liquidity is afforded through the company’s ultimate parent, Wells Fargo & Company, one of the largest publicly traded financial services organizations in the United States.
A.M. Best assigned a debt rating of “bbb+” to the issuance of CAD 250 million 4.35% fixed rate Class A non-cumulative five-year rate reset preferred shares series 8R of Sun Life Financial Inc. The assigned outlook is stable. This issuance is a draw down from Sun Life’s CAD 5 billion shelf registration filed during 2009 with the Canadian Securities Regulators. All remaining Sun Life ratings are unchanged.
Under the terms of the offering, the shares will not be redeemable by Sun Life prior to June 30, 2015. Effective June 30, 2015 and every five years thereafter, the dividend rate on the preferred shares will reset at a rate equal to the five-year Government of Canada bond yield plus 1.41%. At the same time, holders may elect to convert their series 8R shares into an equal number of Class A non-cumulative floating rate preferred shares series 9QR (series 9QR shares) and on June 30 every fifth year thereafter. Holders of the series 9QR shares will be entitled to receive non-cumulative preferential floating rate quarterly dividends equal to the then three-month Government of Canada Treasury Bill yield plus 1.41%.
Town and Country Mutual Insurance Co.
A.M. Best downgraded the FSR to C++ (marginal) from B (fair) and ICR to “b+” from “bb” of Town and Country Mutual Insurance Co. The outlook for the ICR has been revised to negative from stable, while the outlook for the FSR is stable. Concurrently, A.M. Best withdrew the ratings and assigned an NR-4 to the FSR and an “nr” to the ICR. These withdrawals are in response to management’s request to be removed from A.M. Best’s interactive rating process.
Town and Country’s rating downgrades are due in part to continuation in its underwriting losses in 2009 and the erosion of its capital, the rating agency says. Town and Country experienced a surplus loss of 38.0% in 2009, following a 40.5% surplus decline in 2008. This is the result of frequent and severe storm losses from wind, hail and tornadoes in 2008 and 2009, resulting in almost $2 million in underwriting losses over the last two years. At year-end 2009, Town and Country’s surplus was below $1 million.
United Farm Bureau of Indiana Group and two members
A.M. Best affirmed the FSR of A- (excellent) and ICR of “a-” of the United Farm Bureau of Indiana Group (the Group) and two members, United Farm Family Mutual Insurance Co. (Mutual) and UFB Casualty Insurance Co. (UFB Casualty). Concurrently, A.M. Best has downgraded the FSR to B++ (good) from A- (excellent) and ICR to “bbb+” from “a-” of Countryway Insurance Co. (Countryway). The outlook for all ratings is stable.
The ratings for the Group are based upon the consolidation of Mutual and its wholly owned subsidiaries, UFB Casualty and Countryway. UFB Casualty is 100% reinsured by Mutual.
The Group’s ratings are primarily reflective of its strong capitalization and leading market position in Indiana where it is one of the largest property/casualty insurers and the largest provider of farmowners’ insurance, A.M. Best says.
Moody's upgraded the credit ratings of Unum Group (senior debt to Baa3 from Ba1), and the IFS ratings of the company's U.S. life insurance subsidiaries to A3 from Baa1. The rating outlook for Unum and its insurance subsidiaries is stable.
The strengthening of Unum's credit profile was driven by sustained improvements in the company's profitability and financial flexibility, Moody’s says. The rating agency noted that Unum's earnings have improved over the last several quarters, driven in part by a shift in the business mix in the core U.S. group disability line to small-to-medium size case business, by stronger underwriting and pricing discipline, and by the absence of one-time charges.
Fitch Ratings assigned an 'A-' IFS rating to Validus Reinsurance Ltd., the principal reinsurance operating subsidiary of Validus Holdings Ltd. (Validus). Additionally, Fitch assigned a 'BBB+' issuer default rating (IDR) to Validus and 'BBB' ratings to Validus' senior unsecured notes and a 'BB+' rating to Validus' junior subordinated debt instruments. The rating outlooks are stable.
The ratings reflect Validus' record of strong underwriting profitability, solid capitalization and high-quality and liquid investment portfolio that supports the company's loss reserves, Fitch says. The ratings also consider Validus' significant exposure to earnings and capital volatility derived from its property catastrophe reinsurance products, comparatively short operating history and rapid growth, and the current competitive market conditions and low interest rate environment.
