A.M. Best Co. assigned indicative debt ratings of “bbb” to senior unsecured debt, “bbb-” to subordinated debt and “bb+” to preferred stock, which may be issued under CIGNA Corp.’s recently filed shelf registration statement. This shelf registration statement replaces CIGNA’s previous shelf registration statement, which expired on August 16, 2009. The debt ratings on the expired shelf registration have been withdrawn. CIGNA’s financial strength, issuer credit and remaining debt ratings are unchanged, and the assigned outlook on the new debt ratings is negative.
CIGNA’s ratings reflect its strong operating performance in its core healthcare segment and good financial flexibility, according to A.M. Best. Although CIGNA’s financial leverage had increased to 40% in 2008, the ratio has declined to 36% as of June 30, 2009. Additionally, A.M. Best expects the leverage to continue to decline to a level below 35% by year-end 2009. CIGNA’s debt service coverage remains at an adequate level of 12 times earnings before interest and taxes.
Fitch Ratings affirmed the 'AA' insurer financial strength (IFS) ratings on Factory Mutual Insurance Co. (Factory Mutual) and its affiliates (collectively FM Global). The rating outlook remains negative.
The affirmation follows Fitch's review of FM Global's June 2009 year-to-date statutory results, which have shown significant improvement over the prior year. The negative outlook reflects the company's above-average exposure to equity markets. Despite recent positive equity market trends, there is an ongoing potential for near-term capital volatility.
A.M. Best Co. affirmed the financial strength rating (FSR) of B- (fair) and issuer credit rating (ICR) of “bb-” of Gateway Health Plan Inc. (GHPI). The outlook for both ratings is negative.
Concurrently, A.M. Best has withdrawn the ratings at the company’s request and assigned a category NR-4 to the FSR and “nr” to the ICR. These rating actions reflect the decision of GHPI’s management to withdraw from A.M. Best’s interactive rating process.
Over the past five years, GHPI’s risk-based capital has not grown at the rate required to support the company’s strong revenue development. Generally, underwriting performance was unfavorable for four out of the past five years, which suggests that reimbursement rates have not kept up with the level of increased utilization and the commitments required to support the company’s administrative infrastructure development.
HCC Insurance Holdings Inc. and Certain Subsidiaries
A.M. Best Co. revised the outlook to positive from stable for the ICR of “aa-” and affirmed the ICRs and FSR of A+ (Superior) of Houston Casualty Group (HCC) and its property/casualty members.
A.M. Best also upgraded the ICRs to “a+” from “a” and affirmed the FSRs of A (Excellent) of American Contractors Indemnity Co. and United States Surety Co. In addition, A.M. Best affirmed the FSR of A- (excellent) and ICR of “a-” of Pioneer General Insurance Co.
Additionally, A.M. Best has affirmed the FSRs of A+ (superior) and A (excellent) and ICRs of “aa-” and “a+” of HCC Life Insurance Co. and Perico Life Insurance Co., respectively. The outlook for all the above ratings is stable, except where specified.
Infrassure Ltd. and Infrassure Ltd., Vaduz
A.M. Best Co. affirmed the FSR of A- (excellent) and the ICR of “a-” of Infrassure Ltd. and its affiliate, Infrassure Ltd, Vaduz.The outlook for all ratings is stable.
The ratings of Infrassure reflect an anticipated recovery in the company’s risk-adjusted capitalization in 2009 following weakening in 2008, due to negative operating performance and business expansion. Infrassure continues to benefit from an excellent niche position as an engineering insurance specialist.
Fitch Ratings downgraded the IFS ratings assigned to the life insurance subsidiaries of The Phoenix Companies Inc. (PNX) to 'BBB' from 'BBB+', removed the ratings from rating watch negative, and assigned a negative outlook.
The rating action reflects the deterioration in PNX's statutory capital and risk-based capital (RBC) relative to previous levels and Fitch's expectations. PNX's statutory surplus and asset valuation reserve (AVR) was $619.5 million at the end of the second quarter 2009 versus $853.3 million at year-end 2008 (down 27%). The company's RBC is estimated to have declined to 260% at June 30, 2009, versus 338% at year-end 2008.
Fitch's negative outlook is primarily based on Fitch’s concern over PNX's weak operating earnings profile, very limited financial flexibility, and an expectation of further deterioration in the company's capital position over the near term, driven by credit losses.
Tower Hill Companies
A.M. Best Co. downgraded the FSR to D (poor) from B (fair) and ICR to “c” from “bb” of Tower Hill Preferred Insurance Co., Tower Hill Prime Insurance Co. and Omega Insurance Co. (known collectively as Tower Hill). The outlook for these ratings is negative.
Subsequently, A.M. Best has withdrawn the ratings and assigned a category NR-4 (Company Request) to the FSRs and an “nr” to the ICRs in response to Tower Hill’s management’s request to be removed from A.M. Best’s interactive rating process.
These rating actions consider the companies’ exposure as Florida personal property writers to frequent and severe catastrophic weather events, which is significant on both a gross and net basis, in relation to their surplus positions.
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