A.M. Best, and Moody’s Investors Service released ratings updates. The following are some of the most recent:

 

American Equity Life Holding Co.

A.M. Best Co. assigned a debt rating of “bbb-” to $115.8 million 5.25% senior unsecured convertible notes due in 2029 of American Equity Investment Life Holding Co., which comprises a new convertible debt issue of $52.2 million and an exchange of existing convertible debt of $63.6 million. The assigned outlook is negative.

The affirmation of the existing financial strength ratings, ICR and debt ratings of AEL was based upon factors including AEL’s prominent position in the indexed annuity market, consistently positive operating results on both a Statutory and GAAP basis, favorable surrender protection for its annuity products and leverage ratios commensurate with their ratings.

The negative outlook highlights the downward credit migration in its investment portfolio, exposure to commercial mortgages given the weak economic environment and challenges related to managing high rates of growth, which is partially mitigated by the use of reinsurance.

 

CIGNA Life Insurance New Zealand Ltd.

A.M. Best Co. affirmed the financial strength rating (FSR) of A- (excellent) and the ICR of “a-” of CIGNA Life Insurance New Zealand Ltd. (CLINZ). The outlook for both ratings is stable.

The ratings reflect the company’s strong risk-adjusted capitalization, conservative investment portfolio and stable operating performance, the rating agency says. CLINZ maintains a conservative investment portfolio, holding over 95% of invested assets in cash, short-term deposits and fixed interest securities. The low holdings in growth assets minimized the company’s bottom line impact of the sharp equity market declines seen in the last quarter of 2008. The large holdings in fixed income securities saw an increase in investment income from fair value gains.

 

John Hancock Life Insurance Co. USA and Affiliates

Moody's Investors Service has affirmed the ratings of John Hancock Life Insurance Co. USA and its affiliates in response to the planned reorganization of legal entities within Manulife Financial Corp.'s (MFC) U.S. operations, which will occur on Dec. 31, 2009. As a result of the anticipated reorganization, Moody's also affirmed and will withdraw the ratings of several other MFC U.S. subsidiaries. The rating outlooks on all of MFC's subsidiaries are stable.

The reorganization of the legal structure of MFC's U.S. operations simplifies the management of its U.S. business and marks the final phase in the integration of the legacy Manulife and John Hancock U.S. companies.

As part of the reorganization process, two life insurance subsidiaries—John Hancock Life Insurance Co. (JHLICo) and John Hancock Variable Life Insurance Co. (JHVLICo)—will be merged into JHUSA effective Dec. 31, 2009, and cease to exist, with JHUSA becoming the lead U.S. life insurer for MFC.

 

Nippon Life Insurance Co.

A.M. Best Co. downgraded the ICR to “aa-” from “aa” and affirmed the FSR of A+ (superior) of Nippon Life Insurance Co. (Nissay). The outlook for the ICR has been revised to stable from negative, and the outlook for the FSR remains stable.

The rating actions reflect the continued deterioration in Nissay’s capitalization, which was affected by the financial crisis, A.M. Best says. Nissay’s capital and surplus dropped considerably over two consecutive years, reflecting a decrease in unrealized gains on securities largely due to the rapid fall in share prices and appreciation of the Japanese Yen.

The revised rating outlook reflects A.M. Best’s view of a gradual improvement in Nissay’s capitalization, supported by a stable and still profitable underwriting performance, despite the declining trend in core operating profits due to the stagnant market circumstances. The growth in the bancassurance channel and group market is also considered as a positive factor supporting the stable outlook.

Additionally, A.M. Best affirmed the FSR of A- (excellent) and the ICR of “a-” of Nippon Life Insurance Co. of America (NLB). The outlook for both ratings is stable.

The affirmation reflects the explicit and implicit support NLB receives from its parent company, Nissay, its ongoing profitable operating results and the maintenance of a favorable risk-based capital position.

 

OJSC Transsiberian Reinsurance Corp.

A.M. Best Co. affirmed the FSR of B- (fair) and the ICR of “bb-” of OJSC Transsiberian Reinsurance Corp. The outlook for both ratings is positive.

The ratings reflect Transsib Re’s good business position, weak but improving risk-adjusted capitalization and good underwriting performance. The main offsetting factors are its limited financial flexibility and volatility in the investment income results and weak enterprise risk management.

Transsib Re’s gross written premiums have been declining over the previous two years due to the softening market conditions, which have led the company to re-evaluate its exposure to certain large risks and the Russian motor quota share business. However, A.M. Best expects the decline to be halted mainly due to the increase in liability business both in Russia and Kazakhstan and further growth emanating from the Turkish market.

 

Samsung Fire & Marine Insurance Co. Ltd.

A.M. Best Co. revised the outlook to positive from stable and affirmed the FSR of A+ (superior) and the ICR of “aa” of Samsung Fire & Marine Insurance Co. Ltd.

The ratings reflect Samsung F&M’s superior capitalization, consistent operating performance, low volatility in its operations, and solid risk management, the rating agency says. The positive outlook reflects the company’s improved profitability and risk management over the past five years.

 

XL Capital Ltd.

Moody's Investors Service affirmed the debt ratings of XL Capital Ltd. and the A2 insurance financial strength ratings of the company's principal insurance and reinsurance operating subsidiaries. The rating outlook on XL and its subsidiaries has been changed to stable from negative, reflecting its improved capitalization and financial flexibility, as well as the stabilization of the company's business franchise.

According to Moody's, while XL still faces some challenges, the company's overall credit profile has significantly improved during the past 12 months, resulting in the stabilization of the company's business franchise.

 

 

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