CNA Financial Corp. and its subsidiaries
A.M. Best Co. revised the outlook to stable from negative, and affirmed the financial strength rating (FSR) of A (excellent) and issuer credit ratings (ICR) of “a” of CNA Insurance Cos. (CNA) and its members. Concurrently, A.M. Best has revised the outlook to stable from negative and affirmed the ICR of “bbb” and debt ratings of CNA Financial Corp. (CNAF).
A.M. Best also revised the outlook to stable from negative and affirmed the FSR of A- (excellent) and ICR of “a-” of CNAF’s life/health subsidiary, Continental Assurance Co. (CAC).
The revised outlook primarily reflects the significant increase in the fair value of CNA’s investments in 2009, which combined with solid operating income and other miscellaneous surplus credits, have resulted in an increase in the group’s statutory surplus and substantially improved risk-adjusted capitalization that is more supportive of its ratings.
At the CNAF holding company level, the substantial increase in the fair values of investments in 2009 contributed significantly to dramatically improved comprehensive income and stockholders’ equity, which resulted in appreciably lower financial leverage.
A.M. Best Co. affirmed the FSR of A (excellent) and ICR of “a” of CNA Surety Corporation Group (CNA Surety) and its members. Concurrently, A.M. Best has affirmed the ICR of “bbb” of its immediate parent, CNA Surety Corp., owned by CNAF. The outlook for all ratings is stable.
These ratings reflect CNA Surety’s solid risk-adjusted capitalization, historically profitable operating results and leading market position in the contract and miscellaneous surety bond markets.
A.M. Best Co. upgraded the FSR to B++ (good) from B+ (good) and ICR to “bbb” from “bbb-”of Farmers Mutual Insurance Co. The outlook for both ratings is stable.
The rating upgrade reflects Farmers’ conservative underwriting leverage, favorable operating performance and local market expertise providing a variety of personal, commercial and farm owners’ insurance products to West Virginia residents. The company’s success is derived from its solid core business values and focused business plan, which has led to stabilization within the company as evidenced by its consistently profitable operating results over the most recent five-year period. Continuation of this trend was observed in 2009 as reflected by another solid year of operating results and moderate growth in surplus amid challenging market conditions. The rating upgrade further acknowledges the company’s excellent claim service capabilities, technology enhancements and solid agency relationships.
Moody's Investors Service assigned an A3 insurance financial strength (IFS) rating to Fubon Life Insurance Co. Ltd. (Fubon Life). The rating outlook is stable. This is the first time that Moody's has assigned a rating to Fubon Life.
The rating reflects Fubon Life’s excellent market position, strong bancassurance channel and good liquidity, Moody’s says. Additionally, Fubon Life has significantly strengthened its market presence and agency forces, following the merger with ING Life Insurance Co. Ltd. (Taiwan) in June 2009.
The stable outlook reflects Moody's expectation that Fubon Life will maintain its market position while maintaining a prudent investment and financial management strategy.
S&P affirmed its 'AA' long-term counterparty credit and IFS ratings on Spain-based Mapfre Global Risks, Compania Internacional de Seguros y Reaseguros S.A. (Mapfre Global Risks), a subsidiary of Spanish insurance group Mapfre, S.A. (the Mapfre group). This entity was formerly known as Mapfre Empresas, Compania de Seguros y Reaseguros, S.A. (Mapfre Empresas). The outlook is stable.
Mapfre Empresas was the Mapfre subsidiary that specialized in the insurance of large commercial risks. Following a restructuring of the company, it has been renamed Mapfre Global Risks and will focus on writing global corporate/industrial risks business including aviation, marine and energy. The company's portfolio of small-to-mid-size Spanish commercial business was transferred to a new subsidiary called Mapfre Seguros de Empresas (not rated).
The ratings on Mapfre Global Risks reflect its core status within the Mapfre group. Stand-alone characteristics include its very strong operating performance and very strong capital adequacy.
Fitch Ratings and S&P separately assigned ratings to Pacific LifeCorp (PLC)'s $450-million 6% senior note issuance, due 2020. Fitch Ratings has assigned a 'BBB+' rating to the senior note issuance.
Fitch estimates PLC's pro forma, equity-adjusted financial leverage ratio has increased to 28% from 24% at Sept. 30, 2009. On Feb. 2, 2010, Fitch downgraded PLC's ratings to reflect the company's higher-than-expected earnings and capital volatility, weaker earnings profile going forward, which will pressure organic capital generation, and reduced financial flexibility. The rating action also reflects continued deterioration in the commercial real estate market, which could result in higher-than-expected losses for PLC.
At the same time, Fitch assigned a stable rating outlook to all ratings, which reflects, in part, Fitch's view that PLC's exposure to future investment losses under Fitch's base case loss scenario is manageable in the context of the company's statutory capital and projected operating earnings within parameters captured by the current rating. At Sept. 30, 2009, Fitch estimated PLC's primary life insurance subsidiary's (Pacific Life Insurance Co.) statutory total adjusted capital was $4.1 billion.
S&P assigned its 'A-' rating to Pacific LifeCorp's issuance of senior notes. S&P expects that Pacific LifeCorp will contribute the bulk of the proceeds to Pacific Life Insurance Co. to support the capital position of its U.S. insurance operations. At the same time, S&P affirmed its 'AA-' counterparty credit and FSR on Pacific Life Insurance Co. and Pacific Life & Annuity Co. and its 'A-' counterparty credit rating on Pacific LifeCorp. The outlook on all of these companies remains negative.
Fitch Ratings affirmed Seoul Guarantee Insurance Co.'s (SGIC) IFS rating at 'A', removed it from rating watch negative (RWN) and assigned a stable outlook.
The removal of the rating watch negative status reflects the gradual easing of the negative pressure on SGIC's business growth prospects and operating performance amid improving economic conditions of the South Korean market, the rating agency says. The company sources the bulk of its businesses from this market. The revival of the South Korean economy was reflected in the agency's recent outlook revision on the country's Sovereign rating to stable from negative.
Toyota Motor Insurance Co.
A.M. Best Co. commented that the FSR of A- (excellent), ICR of “a-” and stable outlook of Toyota Motor Insurance Co. are unchanged.
In light of the recent recalls surrounding Toyota Motor Corp., the ultimate parent of Toyota Motor Insurance Co., A.M. Best remains neutral and will monitor the developments of the situation on an ongoing basis.
USHEALTH Group Inc.’s subsidiaries
A.M. Best Co. affirmed the FSR of B (Fair) and ICR of “bb” of National Foundation Life Insurance Co. (NFL) and Freedom Life Insurance Company of America (FLICA), both subsidiaries of the USHEALTH Group Inc. The outlook for all ratings is negative.
The rating affirmations reflect NFL and FLICA’s relatively modest cushion of risk-adjusted capital for their ratings given the organization’s sizeable premium growth projections in the volatile individual medical market, the rating agency says.
Additionally, USHEALTH has a large payment-in-kind preferred debt instrument, which is scheduled to mature in March 2011. A.M. Best notes this security was recently extended a year by a subsidiary of its parent organization, Credit Suisse Holdings (USA) Inc.
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