Fitch Ratings downgraded the financial strength rating (FSR) of bond insurer Assured Guaranty Ltd. (AGO) to AA-, and cut Financial Security Assurance Inc.’s (one of Assured Guaranty’s units) rating to AA. The ratings were removed from “watch for downgrade,” but assigned a negative outlook.
Fitch’s actions are in response to credit losses tied to mortgage-related exposure. Fitch said the ratings have come under pressure as loss estimates have outpaced growth in claims-paying resources, according to The Wall Street Journal.
Assured Guaranty released a response in which president and CEO, Dominic Frederico, said: "We are pleased that Assured Guaranty Corp. and FSA remain in the double-A rating category—a designation indicative of significant financial strength. We believe the one-notch rating downgrades primarily incorporate Fitch's stress loss estimates based on an extremely pessimistic view of the future performance of residential mortgage exposures, and point out that Fitch noted our ability to mitigate potential future losses and improve rating agency capital.”
Moody’s Investors Services changed the outlook for Conseco Inc. to positive from negative, according to Forbes.
Conseco has made efforts to pay down debt and boost capital. After announcing debt reorganization and capital plans, the insurer’s shares rose to a new 12-month high.
Continental American Insurance Co.
A.M. Best Co. upgraded the FSR to A (excellent) from A- (excellent), and issuer credit rating (ICR) to “a” from “a-” of Continental American Insurance Co. (Continental American). The ratings have been removed from under review with positive implications and assigned a stable outlook.
Continental American’s ratings had been placed under review following the announcement that Aflac Inc. had signed a definitive agreement to purchase the company.
A.M. Best’s upgrades reflect Aflac’s purchase of Continental American, which was effective Oct. 1, 2009, at a purchase price of $100 million. As a result of this transaction, Aflac gained access to the group supplemental insurance market, which will complement its market-leading position in the individual U.S. payroll deduction market.
Endurance American Insurance Co.
Standard & Poor's Ratings Services assigned counterparty credit and FSRs ratings of “A” to Endurance American Insurance Co. (EAIC), American Merchants Casualty Co. (AMCC), and American Agri-Business Insurance Co. (AABIC), according to The Royal Gazette.
The ratings on EAIC, AMCC, AABIC, along with Endurance American Specialty Insurance Co., reflect their core status to the group, the newspaper reports.
S&P has also affirmed all of its existing ratings on Bermuda-based Endurance Specialty Holdings Ltd. (currently BBB+ with a stable outlook) and its core subsidiaries. The outlook is stable.
A.M. Best Co. assigned a debt rating of “aa-” to the $400 million 7.375% surplus note due Sept. 30, 2039 of Guardian Life Insurance Co. of America. The rating agency also affirmed the FSR of A++ (superior) and ICR of “aa+” of Guardian, Guardian Insurance & Annuity Co. Inc. and Berkshire Life Insurance Co. of America.
The surplus note will be utilized for general corporate purposes. The outlook for all ratings is stable. The ratings reflect Guardian’s superior capital levels and continued positive earnings supported by investment income and premium growth trends, according to A.M. Best.
A.M. Best Co. assigned a debt rating of “aa” to the $1.0 billion 6.75% 30-year surplus notes issued by New York Life Insurance Co. The outlook for the rating is negative. The existing FSR, ICR and debt ratings of New York Life and its affiliates are unchanged.
The proceeds from the offering will be utilized by New York Life for general corporate purposes, and will strengthen its statutory capital position. A.M. Best believes that the additional capital will serve to cover a large portion of both incurred and further potential investment losses in 2009.
A.M. Best notes that this benefit is somewhat offset by the higher statutory capital ratio of surplus notes to adjusted capital and surplus, which increases to approximately 14%, and the additional costs to service the new debt securities will be a small drag on the group’s earnings. However, New York Life’s all-in, pro forma GAAP-adjusted financial leverage of 11.5% (excluding other comprehensive income) is within A.M. Best’s guidelines for the company’s current ratings.
Ohio Indemnity Co. and Bancinsurance Corp.
A.M. Best Co. revised the outlook to stable from negative, and affirmed the FSR of A- (Excellent) and ICR of “a-” of Ohio Indemnity Co. Concurrently, A.M. Best revised the outlook to stable from negative, and affirmed the ICR of “bbb-” of Ohio Indemnity’s parent, Bancinsurance Corp.
The ratings of Ohio Indemnity reflect its excellent risk-adjusted capitalization, improved (albeit variable) operating results and long-term relationships with banks, credit unions and financial companies with whom it provides specialty insurance products, the rating agency says.
Somewhat offsetting these positive ratings factors are continued soft market conditions within the auto industry, to which many of the company’s products are tied, growth in new specialty programs, concentration risk within its premium and geographic distribution (as evidenced by two clients and two states representing approximately 50% of gross written premiums) and the uncertainties related to the Securities and Exchange Commission’s ongoing investigation of Bancinsurance and three of its executives who received Wells Notices in October 2007. A.M. Best notes that Ohio Indemnity’s concentration in its premium distribution is somewhat offset by its long-term relationships with a number of its clients.
Fitch Ratings assigned a long-term issuer default rating (IDR) of AA- and a short-term IDR of F1+ to Thrivent Financial for Lutherans. The rating agency also affirmed the insurer FSR of Thrivent Financial and its subsidiary, Thrivent Life Insurance Co. at AA. The rating outlook remains negative.
The new IDR ratings have been assigned by Fitch in conjunction with Thrivent Financial's strategic move into the business of providing credit enhancement products in niche Lutheran related markets they serve.
The ratings of Thrivent Financial and Thrivent Life reflect the organization's relatively stable capital base since year-end 2008 and the expectation that operating earnings before policyholder dividends will experience manageable decreases in 2009 followed by a recovery in 2010. The negative outlook reflects the possibility that losses due to investments could be higher than Fitch's current base case projection of $600-$700 million for the remainder of 2009-2010.
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