11 Insurers See Ratings Actions
Insurance Networking News, January 12, 2010
A.M. Best, Fitch Ratings, Moody’s Investors Service and Standard & Poor's announced ratings updates. The following are some of the most recent:
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A.M. Best Co. upgraded the financial strength rating (FSR) to A+ (superior) from A (excellent) and issuer credit rating (ICR) to “aa” from “a” of AGCS Marine Insurance Co., a wholly owned subsidiary of Allianz Global Risks US Insurance Co. The outlook for both ratings is stable.
These rating actions reflect a change in the organizational structure of AGCS Marine, which on January 1, 2010, became a subsidiary of Allianz US through a stock dividend from Fireman’s Fund Insurance Co.
The ratings reflect A.M. Best’s view that AGCS Marine is an integral part of the strategy of its ultimate parent company, Allianz Societas Europaea (Allianz SE). Allianz SE provides explicit support to Allianz US and its group members. Other rating factors include the North American consolidated group’s strong risk-adjusted capitalization, solid business franchise, improved underwriting and operating performance in recent years and anticipated earnings diversification. Offsetting these positive rating factors are the historically poor underwriting performance and the inherent risks associated with the recent growth in premium production.
Moody's Investors Service placed the Baa1 rating of the Allianz France (formerly AGF) EUR400 million deeply subordinated note issued February 2005 on review for possible downgrade. This rating action follows the publication of Moody's revised rating methodology for insurance hybrids, issued on Jan. 12, 2010.
The instrument contains language typically known as a "Mandatory Deferral Trigger" that states that in the event of Allianz France recording a 12-month net loss that is greater than its retained earnings over the previous 24 months then Allianz France must cancel the coupon paid to investors. The cancelled coupons are not due and payable by Allianz France.
The operating companies of Allianz France SA, Allianz Vie and Allianz IARD are rated Aa3 with stable outlooks.
Broome Co-operative Insurance Co.
A.M. Best Co. assigned a FSR of B++ (good) and ICR of “bbb+” to Broome Co-operative Insurance Co. The outlook assigned to both ratings is stable.
The ratings reflect Broome Co-op’s favorable level of risk-adjusted capitalization, which is attributable to its low underwriting leverage position and conservative investment portfolio. The ratings also acknowledge Broome Co-op’s consistently strong operating income, favorable underwriting performance driven by lower than average losses from its seasoned book of business, and its long-standing local market presence as a property lines writer in New York.
Chartis International Insurance Co.
S&P withdrew its 'A+' FSR on Chartis International Insurance Co. of Puerto Rico (Chartis PR). National Union Fire Insurance Co. of Pittsburgh, which is an affiliate of Chartis PR, terminated its guarantee of Chartis PR's debt effective Dec. 31, 2009. Following this termination, Chartis PR requested that Standard & Poor's withdraw the rating.
CIGNA Corp. and Its Subsidiaries
A.M. Best Co. affirmed the FSR and ICR of the life/health subsidiaries of CIGNA Corp. Additionally, A.M. Best has affirmed the ICR and debt ratings of CIGNA. The outlook for all ratings is negative.
A.M. Best also withdrew the FSRs of A- (excellent) and ICRs of “a-” and assigned a category NR-3 (rating procedure inapplicable) to the FSRs and an “nr” to the ICRs of CIGNA Healthcare–Centennial State Inc. (f/k/a Great-West Healthcare of Colorado Inc.) and CIGNA HealthCare of Pennsylvania Inc., both of which are in run off.
The affirmations reflect CIGNA’s solid operating company results and improved capital position as well as CIGNA’s low risk operating strategy and earnings diversification. CIGNA achieves solid margins across its diversified portfolio of businesses, including healthcare, group, disability/life and international. Each of these segments has generated consistent near-term earnings given the difficult economic conditions and the stability of the financial markets over second half 2009.
Farm Bureau County Mutual Insurance Co. of Texas
A.M. Best Co. has upgraded the FSR to A (excellent) from A- (excellent) and ICR to “a” from “a-” for Farm Bureau County Mutual Insurance Company of Texas (County Mutual). These ratings have been removed from under review with positive implications and assigned a stable outlook.
These rating actions reflect a revised 100% quota share reinsurance agreement between County Mutual and Texas Farm Bureau Casualty Insurance Co., as well as a capital contribution.
A.M. Best Co. affirmed the FSR of A (excellent) and ICR of “a” of Fireman’s Fund Insurance Cos. (Fireman’s Fund), which includes Fireman’s Fund Insurance Co. and its intercompany pool participants and reinsured affiliates. Additionally, A.M. Best affirmed the ICR of “a” of Allianz of America Inc. The outlook for all ratings is stable.
The ratings reflect Fireman’s Fund’s solid stand-alone capitalization and favorable operating performance over the past five years. The ratings also consider the group’s strategic importance to the global insurance operations of its German-based ultimate parent, Allianz Societas Europaea, along with the explicit and implicit support Fireman’s Fund has received in prior years. This commitment remains vital to Fireman’s Fund’s current ratings.
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