Moody's confirmed with a negative outlook the Baa2 long-term rating for the perpetual capital securities and perpetual subordinated securities of AEGON N.V. and the Baa3 long-term rating for the trust preferred securities of Transamerica Capital II and Transamerica Capital III. The rating actions conclude Moody's review for possible downgrade of the ratings of these securities initiated on Sept. 1, 2009.
There has been no change to the A3 senior rating of AEGON N.V. and the A1 insurance financial strength ratings of AEGON's U.S. life insurance operating companies. The outlook on all the AEGON companies continues to be negative.
The action continues to reflect Moody’s assumption of a low probability of coupon suspension on these securities as a result of the ongoing discussion between AEGON and the European Commission (EC) on its state aid package. The conclusion of the review and move to negative outlook reflects Moody's belief that, while the scenario of coupon suspension remains possible but with low probability, the timeframe for such a conclusion is more consistent with a medium-term outlook on the ratings. Moody’s also notes the EC rulings on some other financial institutions, which received state-aid.
Hatherley Insurance Ltd.
A.M. Best upgraded the financial strength rating (FSR) to A (excellent) from A- (excellent) and issuer credit rating (ICR) to “a” from “a-” of Hatherley Insurance Ltd. The outlook for both ratings is stable.
The ratings reflect Hatherley’s strong risk-adjusted capitalization, excellent liquidity and conservative operating strategy, A.M. Best says. The ratings also consider the company’s important role within JPMorgan Chase & Co., as a single parent captive for the group’s casualty insurance programs. As part of JPMorgan Chase, Hatherley also benefits from the group’s extensive risk management and business continuity programs, as well as its substantial financial flexibility. Partially offsetting these positive rating factors are Hatherley’s variable operating results in recent years.
Fitch Ratings has affirmed the issuer default rating (IDR) at 'BBB+' for Markel Corp. (MKL). Fitch also affirmed Markel’s following senior notes:
• $250 million 6.8% senior notes due Feb. 15, 2013 at 'BBB';
• $350 million 7.125% senior notes due Sept. 30, 2019 at 'BBB';
• $200 million 7.35% senior notes due Aug. 15, 2034 at 'BBB';
• $150 million 7.5% senior notes due Aug. 22, 2046 at 'BBB'.
Fitch affirmed the IFS at ‘A’ for the following Markel companies:
• Markel International Insurance Company Limited (MINT)
• Associated International Insurance Co.
• Deerfield Insurance Company
• Essex Insurance Company
• Evanston Insurance Company
• Markel American Insurance Company
• Markel Insurance Company
The Rating Outlook has been revised to Stable from Negative. The revision reflects the recovery of MKL's capitalization to record highs through solid operating performance and the reversal of unrealized losses, primarily on equity investments, Fitch says. MKL's shareholders' equity increased 4.7% to $2.9 billion at March 31, 2010.
MKL's rating strengths include pricing and underwriting discipline through market cycles, expertise in a number of specialty property/casualty insurance products and niche markets, and conservative actuarial reserving practices which contribute to balance sheet strength as well as earnings quality and stability, according to the rating agency. MKL's long-term financial performance, measured by growth in book value per share, is among the best in the industry.
Mutual of Omaha Insurance Co. and core affiliates
S&P revised its outlook on Mutual of Omaha Insurance Co., United of Omaha Life Insurance Co. and Companion Life Insurance Co. (NY) to stable from negative. The rating agency also affirmed its 'AA-' counterparty credit and FSRs on these companies and its 'A' counterparty credit and financial strength ratings on United World Life Insurance Co.
The revised outlook reflects S&P’s expectation that the statutory capitalization of the entire group will remain supportive of the ratings over the long term.
S&P’s pro forma year-end 2009 capital model, which incorporates stress factors for various asset classes in addition to the baseline capital charges, continues to show a capital deficiency for Mutual of Omaha at the 'AA' rating level. However, the group's statutory earnings capability should be sufficient to offset the rating agency’s view of stressed investment losses within a one-year horizon.
Park Assurance Co.
A.M. Best Co. upgraded the FSR to A (excellent) from A- (excellent) and ICR to “a” from “a-” of Park Assurance Co. The outlook for both ratings is stable.
The ratings reflect Park’s strong balance sheet, excellent liquidity and conservative operating strategy, A.M. Best says. The ratings also recognize the company’s favorable operating results and its role as a single parent captive of JPMorgan Chase & Co.
Partially offsetting these positive rating factors are Park’s large gross underwriting exposures as it offers very high insurance limits and insures some properties with substantial insured values, A.M. Best says. Park is very dependent on reinsurance in order to offer its various property programs and high limits.
A.M. Best withdrew the FSR of B- (fair) and ICR of “bb-” of Southern United Fire Insurance Co. and assigned a category NR-5 (Not Formally Followed) to the FSR and “nr” to the ICR.
These rating actions follow A.M. Best’s confirmation that Southern United has been merged into American Service Insurance Company Inc. and no longer exists. American Service is a wholly owned subsidiary of Kingsway America Inc. The ultimate parent of both companies is Kingsway Financial Services Inc., a Canadian holding company whose common shares are listed on the New York and Toronto Stock Exchanges.
The FSR of B- (Fair) and ICR of “bb-” for American Service are unchanged by this merger and remain under review with negative implications.
Moody's affirmed the insurance FSR of Standard Life Assurance Ltd. (SLAL) at A1 with a stable outlook. At the same time, Moody's also affirmed the A3 guaranteed subordinated debt issued by Standard Life Plc (SL) and the Baa1 guaranteed junior subordinated debt.
The affirmation reflects a combination of SL's robust financial performance over recent years, notwithstanding the challenging operating environment, the rating agency says. Moody’s believes that in comparison to a number of other UK and Continental life insurers, SL's regulatory capital position has remained broadly stable over the crisis reflecting the group's attitude to risk management and the extensive de-risking exercises undertaken both as part of the IPO-process and subsequently.
As reflected in the negative industry outlook, Moody's views the UK life market as one of the most competitive in Europe, as well as being one of the insurance markets most affected by a relatively prolonged period of weak economic growth.
Unitrin Inc. and its subsidiaries
A.M. Best Co. affirmed the FSR of A- (excellent) and ICR of “a-” of Unitrin Property and Casualty Insurance Group (Unitrin P&C) and its members.
A.M. Best also affirmed the FSRs of A- (excellent) and ICRs of “a-” of United Insurance Company of America (UICA), Union National Life Insurance Co., The Reliable Life Insurance Co. and Mutual Savings Life Insurance Co., comprising the career agency life/health subsidiaries of the publicly traded parent, Unitrin Inc.
Concurrently, A.M. Best affirmed the ICR of “bbb-” and the existing senior debt ratings of Unitrin. The outlook for all the above ratings is stable.
In addition, A.M. Best removed from under review with developing implications and affirmed the FSR of A- (excellent) and ICR of “a-” of Reserve National Insurance Company (RNIC), Unitrin’s exclusive independent agency life/health company. The outlook assigned to these ratings is negative.
The affirmation of the ratings for Unitrin P&C reflects its adequate risk-adjusted capitalization, the actions taken to reduce catastrophe exposure, its improved underwriting results, reduction of common stock leverage and improved geographic spread of risk, A.M. Best says.
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