A.M. Best Co. assigned a debt rating of “a-” to the newly issued $300 million 3.45% senior unsecured notes due 2015 and $450 million 6.45% senior unsecured notes due 2040 of Aflac Inc. The assigned outlook is stable.
Proceeds from the senior notes will be used to repay in full at maturity the 1.52% Uridashi notes and variable interest rate Uridashi notes, both due September 2011, to potentially repurchase common stock and for general corporate purposes. Aflac’s existing financial strength, issuer credit and debt ratings are unchanged.
This debt offering enhances Aflac’s financial flexibility, the rating agency says. Aflac continues to maintain strong brand recognition in both Japan and the United States and a healthy risk-adjusted capital position at its operating subsidiaries.
Alianza Seguros and
Moody assigned a B2 global local-currency insurance financial strength (IFS) rating and a Aa3.bo Bolivian national scale IFS rating to Alianza Compania de Seguros y Reaseguros S.A. ("Alianza Seguros") and to Alianza Vida Seguros y Reaseguros S.A. (Alianza Vida). Both companies carry a stable outlook.
Alianza Seguros is a leading property/casualty insurer in the Bolivian market, focusing primarily on accident/health and fire/allied perils, while the smaller Alianza Vida is a mid-sized life insurer operating in the same country, which focuses on the credit insurance and accident/health sectors, according to the rating agency.
Moody's ratings on Alianza Seguros reflect the company's adequate positioning in the local market—being the leading player in the accident and health insurance segment and one of the largest companies in terms of gross premiums for the overall P&C market. Another key company strength is its sustained profitability track record, with an 8% average return on capital during the past five years.
The rating agency says that Alianza Vida's ratings are based on the company's sustained and adequate profitability (five year average return on capital of 18%), its control over distribution channels, and the relatively low product risk of its key business lines of credit life and accident/health insurance.
Fitch Ratings has affirmed American International Group Inc.’s (AIG) issuer default rating (IDR) and the ratings on AIG’s senior unsecured and subordinated securities as follows:
• IDR at ‘BBB’
• Senior unsecured notes at ‘BBB’
• Subordinated hybrid securities at ‘B’
• Short-term IDR at ‘F1’
• The rating outlook is stable
The rating action follows AIG’s announcement that the company has agreed to sell 80% of its American General Finance Corp. (AGFC) subsidiary to Fortress Investment Group LLC. After the transaction’s anticipated close in the first quarter 2011, close, Fitch expects AIG will be a passive minority shareholder with no board representation.
A.M. Best affirmed the issuer credit rating (ICR) of “aa” of the Maiden Re – ARI Reinsurance Trust Agreement (trust) dated Jan. 1, 2010, between Maiden Reinsurance Co. (Maiden Re), a corporation organized under the laws of the State of Missouri (the Grantor), ARI Mutual Insurance Co. and ARI Casualty Co. (ARI), both corporations organized under the laws of the State of New Jersey (the beneficiary) and State Street Bank and Trust Co., a Massachusetts trust company (the trustee). The rating outlook is stable.
The trust collateralizes liabilities assumed by Maiden Re from ARI. Maiden Re and ARI are wholly responsible for determining the liabilities (the collateral base), which consist of case loss reserve, incurred but not reported losses (IBNR) and unearned premiums, net of open balances. As of July 2010, the collateral base of the trust was $22.2 million, which represents the amount ARI expects in the trust to secure payments under various reinsurance agreements with Maiden Re.
A.M. Best placed under review with negative implications the financial strength ratings (FSR) of A + (Superior) and ICR of “aa” of The Manufacturers Life Insurance Co. (MLI), John Hancock Life Insurance Co. and JHUSA’s subsidiaries, John Hancock Life Insurance Company of New York and John Hancock Life & Health Insurance Co. (Massachusetts).
Additionally, A.M. Best placed under review with negative implications the ICR of “a” and all debt ratings of Manulife Financial Corp. (Manulife) and Manufacturers Investment Corp. (MIC).
These rating actions follow the $2.4 billion net loss reported by Manulife for the second quarter of 2010, which was above A.M. Best’s expectations. The weak earnings were primarily a result of Manulife’s continuing exposure to equity markets, which declined in the second quarter of 2010 and the low interest rates in the United States. These losses may reverse with improved capital market performance. A.M. Best notes that while progress continues to be made, Manulife has a large block of segregated funds, of which 49% of the guarantee risk is unhedged and contributes to earnings volatility in periods of market turbulence. In addition, Manulife has indicated that during the third quarter of 2010, it is expecting to complete an annual review of all actuarial methods and assumptions that will likely result in a charge related to the company’s long-term care business.
The ratings will remain under review pending further discussions with Manulife regarding its continuing risk mitigation and capital management strategies, as well as any updates on the performance of its key product lines.
Moody's affirmed the debt ratings (Baa1 senior, and see list below) of Old Mutual plc, the A1 IFSR of Old Mutual Life Assurance Co. and the A2 IFSRs of Skandia Insurance Co. Ltd. and Skandia Life Assurance Co. The outlook on all of these ratings has been revised to stable from negative. Moody's has also affirmed Old Mutual's short-term ratings of P-2.
The stabilization of the outlook is driven by Old Mutual Group's recent announcement that it has agreed terms to sell its U.S. life operations; Moody's previous negative outlook was principally driven by the challenges the Group faced from these operations. Furthermore, the Group's adjusted operating performance, capitalization, and risk management controls have been improving, and the good business and financial fundamentals of Skandia and, especially, OMLACSA continue.
A.M. Best removed from under review and downgraded the FSR to B++ (good) from A- (excellent) and ICR to “bbb+” from “a-” of OM Financial Life Insurance Co. and its wholly owned subsidiary, OM Financial Life Insurance Company of New York (together known as OM Financial Life). The ratings have been assigned a stable outlook. OM Financial Life represents the U.S. life insurance and annuity operations of Old Mutual plc (Old Mutual), a leading international long-term savings group based in South Africa and the United Kingdom.
These rating actions follow the announcement that Old Mutual agreed to terms to sell its U.S. life and annuity operations to affiliates of Harbinger Capital Partners LLC (Harbinger) for $350 million. Harbinger is a private investment fund based in New York with $10 billion in assets under management. The sale is subject to regulatory approval and is expected to close on or after Dec. 31, 2010.
S&P affirmed its 'A+/A-1' long- and short-term counterparty credit ratings on U.K.-based insurance holding company Prudential PLC (Prudential). At the same time, the 'AA' long-term counterparty credit and IFS ratings on Prudential's core insurance operating subsidiaries including U.K.-based The Prudential Assurance Co. Ltd. (PAC) and U.S.-based Jackson National Life Insurance Co. were affirmed.
In addition, all ratings were removed from CreditWatch, where they were placed with negative implications on March 1, 2010, following Prudential's announcement that it had agreed to acquire AIA Group Ltd., an agreement that was later terminated on June 3, 2010. The outlooks on all entities are stable.
A.M. Best revised the outlook to positive from stable and affirmed the FSR of B++ (good) and issuer credit rating of “bbb+” of Westminster American Insurance Co.
The ratings reflect Westminster’s favorable risk-adjusted capitalization, strong balance sheet liquidity and several years of strong operating performance, A.M. Best says.
Westminster’s strong capital position is derived from its demutualization in 2005 and a capital contribution from its new owner, Westminster American LLC. Additionally, the management team implemented corrective actions that improved Westminster’s operating performance causing surplus growth through internal operations. The outlook is reflective of A.M. Best’s expectation that Westminster will continue to produce solid operating results and maintain a favorable level of risk-adjusted capitalization as the management team focuses on expanding its distribution channels and growing a profitable commercial book of business.
