Aflac Inc. and its subsidiaries
A.M. Best Co. affirmed the financial strength rating (FSR) of A+ (superior) and issuer credit ratings (ICR) of “aa-” of American Family Life Assurance Company of Columbus, American Family Life Assurance Company of Columbus (Japan Branch) and its wholly owned subsidiary, American Family Life Assurance Company of New York. In addition, A.M. Best upgraded the FSR to A+ (superior) from A (excellent) and ICR to “aa-”from “a” of Continental American Insurance Co.
Concurrently, A.M. Best affirmed the ICR of “a-” and all existing debt ratings of the ultimate parent, Aflac Inc. The outlook for all ratings is stable.
Aflac’s ratings reflect its solid capital position, favorable statutory and GAAP operating results and strong brand recognition, A.M. Best says. During 2009, Aflac raised $1.4 billion through U.S. public debt offerings and loans. The rating agency notes that Aflac’s financial leverage remains below 25%, which is consistent with its current ratings. The operating companies’ capitalization was supported by Aflac’s $500 million capital contribution, which helped to partially offset the sizable capital losses incurred last year.
AGL Life Assurance Co.
S&P kept its 'BB-' counterparty credit and FSRs on AGL Life Assurance Co. on CreditWatch with developing implications. The ratings on The Phoenix Cos. Inc. (PNX; CCC+/Negative/--) and its other subsidiaries are unaffected. S&P placed its ratings on AGL on CreditWatch developing on Jan. 6, 2010. This followed PNX’s announcement that it signed a definitive agreement with Tiptree Financial Partners LP for Tiptree to acquire PNX's private placement insurance business, PFG Holdings Inc., including its subsidiaries, Philadelphia Financial Group Inc. and AGL.
"At the time of PNX's announcement, we revised the group status of AGL to nonstrategic from core based on our group methodology criteria," says S&P’s credit analyst Adrian Pask. "In most instances, non-strategic entities are rated on a purely stand-alone basis, with no ratings uplift for group support."
The rating agency will evaluate AGL's financial strength and counterparty credit characteristics on a stand-alone basis, as well as the plans of its new ownership. This evaluation could lead to either an upgrade or a downgrade of AGL following a review of its prospective business and financial profile.
Moody's affirmed the ratings of Genworth Financial Inc. (senior debt at Baa3) and its life insurance companies led by Genworth Life Insurance Co. (insurance financial strength (IFS) rating at A2), and changed the outlook for the companies to stable from negative.
The affirmation and change in outlook primarily reflects the improvement in the company's financial flexibility, the rating agency says. Over the past year, Genworth has taken a number of prudent steps to improve its capital structure and liquidity, says Moody’s SVP Scott Robinson.
“This includes the IPO of a minority share of its Canadian mortgage insurance operations, which raised approximately $700 million, as well as holding company capital raises,” he says. “Furthermore, we expect some earnings improvement, especially from a moderation of impairments and less negative trends in the residential housing markets."
HCC Insurance Co.
A.M. Best Co. has withdrawn the FSR of A+ (superior) and ICR of “aa-” of HCC Insurance Co. (HCCIC) and assigned an NR-5 (not formally followed) to the FSR and an “nr” to the ICR.
On March 18, 2010, HCCIC was purchased by Deere & Co. Subsequent to the completion of the sale of HCCIC as a clean shell, the name was changed to John Deere Insurance Co. In concurrence with the completion of the sale, and with respect to any new business only, HCCIC terminated its existing 100% quota share reinsurance contract with former immediate parent company, Houston Casualty Co., from which HCCIC had derived its ratings.
The ICR of “a-” and debt ratings of HCCIC’s ultimate parent, HCC Insurance Holdings, Inc. and the FSRs and ICRs of its subsidiaries are unchanged.
Fitch Ratings downgraded all long-term ratings on Massachusetts Mutual Life Insurance Co. (MassMutual) and its wholly owned insurance subsidiaries. Fitch has also revised the rating outlook to stable from negative.
The downgrade reflects earnings volatility and investment losses in recent periods that Fitch believes are not consistent with the prior rating levels. These concerns were the rationale for the prior negative outlook assigned in March 2009. In 2009, MassMutual's statutory net operating gain of $572 million was reduced to a net loss of $289 million after recognition of net realized capital losses. Over the past five years, MassMutual's statutory net income has ranged from a positive $703 million to a negative $993 million.
The stable outlook reflects Fitch's view that MassMutual has financial flexibility to maintain strong levels of capital even under stressed scenarios. Fitch considers the participating nature of MassMutual's in-force whole life business as well as experience pass-through features of other insurance products as a significant source of financial flexibility. Fitch also recognizes that there is remaining hidden value in MassMutual's asset management businesses and real estate (albeit at reduced levels from previous years) not reflected in its regulatory capital.
The ratings and outlook also consider MassMutual's solid and diversified operating earnings fundamentals, which have been more stable than net income. Although Fitch expects net investment income for MassMutual and the industry to be depressed due to the low interest rate environment and potentially less income from alternative investments, Fitch believes MassMutual's earnings will benefit from its strong whole life sales and sales force growth in 2008 and 2009, which were notable in a difficult environment. Fitch also recognizes that operating results are reflective of the company's comparatively high level of policyholder dividend payments.
The ratings on C.M. Life Insurance Co. and MML Bay State Life Insurance Co., which are wholly owned subsidiaries of MassMutual, are based on certain commitments and guarantees made by MassMutual as well as Fitch's view that these entities are important operating companies within the MassMutual organization.
S&P raised its long-term counterparty credit and insurer FSRs on United Arab Emirates-based composite insurer Oman Insurance Co. (PSC) to 'BBB+'. At the same time, the rating agency removed the ratings from CreditWatch with negative implications, where they had been placed on Nov. 27, 2009. The outlook is stable.
Final resolution of the CreditWatch on Oman Insurance was dependent on resolution of the negative CreditWatch on its parent, Mashreqbank, (BBB+/Negative/A-2).
“Under the segmented ratings criteria, the ratings on Oman Insurance are based on its standalone credit profile, although they are also subject to a 2-notch limit above the rating on its parent," says S&P’s credit analyst Nigel Bond. "As a result, we upgraded Oman Insurance by one notch, which coincidentally gives it the same rating, but not the same outlook, as its parent bank. In the absence of these criteria, the ratings would have been capped at its parent's level."
Fitch Ratings affirmed the IFS rating of Primerica Life Insurance Co. at 'A+', and revised the rating outlook to stable from evolving. The actions follow the sale of a majority stake in Primerica Inc. (Primerica) the newly formed holding company of Primerica Life, by the company's former parent, Citigroup Inc., through an initial public offering on March 31, 2010.
The affirmation and revision of the rating outlook to stable reflect the conclusion of uncertainty around Primerica's ownership and organizational structure, which had previously pulled the rating down. The rating actions also reflect a number of significant related-party reinsurance and capital management transactions that were completed prior to the IPO, which together have what Fitch views to be a negative effect on Primerica's financial position and operating profile.
On a going-forward basis the rationale for Fitch's 'A+' IFS rating is based on Primerica Life's successful business model, which has delivered many years of consistently strong operating performance, influenced heavily by its stable, efficient captive distribution force, as well as the company's conservative investment profile, the rating agency says.
A.M. Best Co. has withdrawn the FSR of A (excellent) and ICR of “a+” of Swiss Re Life & Health Canada (SRL&HC) and assigned an NR-5 (not formally followed) to the FSR and an “nr” to the ICR.
Effective Jan. 1, 2010, all of the reinsurance liabilities of SRL&HC were transferred to Swiss Reinsurance Company Ltd., Canadian Branch as a result of the group’s legal entity simplification in Canada. Swiss Reinsurance Company Ltd., Canadian Branch will continue to serve as the group’s main carrier for both the Canadian property/casualty and life/health reinsurance markets. Accordingly, the ratings of SRL&HC have been withdrawn.
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