12 Insurers See Ratings Updates
AIG, Chubb, Swiss Re and nine others receive updates.
Insurance Networking Ratings Corner, January 30, 2013
A.M. Best, Fitch Ratings, Standard & Poor’s (S&P’s) and Moody’s Investors Service released ratings updates. The following are some of the most recent:
American International Group Inc. and its subsidiaries
A.M. Best has affirmed the issuer credit rating (ICR) of “bbb” of American International Group Inc. (AIG). Concurrently, A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the ICRs of “a” of the members of the Chartis U.S. Insurance Group (Chartis US) and the members of the Lexington Insurance Pool. At the same time, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of American International Reinsurance Co. Ltd., a reinsurer. The outlook for the ratings above is stable.
In addition, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of AIU Insurance Co. The outlook for these ratings is negative.
The ratings for the members of Chartis US reflect its supportive level of risk-adjusted capitalization, generally solid operating earnings and its leadership position in the global commercial lines insurance market. Offsetting rating factors include the effect of soft market conditions on the group’s recent underwriting and operating results, A.M. Best’s expectation of continued adverse development of prior years’ loss reserves and the group’s exposure to natural and man-made catastrophe losses. Chartis US historically has demonstrated an ability to produce favorable operating results despite variability in its underwriting performance; however, this ability has been challenged in recent years.
Fitch affirms all ratings for The Chubb Corp., including the 'AA-' Issuer Default Rating (IDR) and 'A+' senior debt rating. Fitch also has affirmed the 'AA' Insurer Financial Strength ratings (IFS) of Chubb's property/casualty insurance subsidiaries, which are led by Federal Insurance Co. (Federal). The Rating outlook is stable.
The ratings continue to reflect Chubb's market position as a leading property/casualty insurer, history of favorable underwriting performance, strong capital position at both the insurance subsidiary and parent holding company levels, and conservative investment portfolio. Chubb is the 13th-largest writer in the United States, based on 2011 net written premiums. The company has significant international operations as about 26 percent through nine months of 2012 revenues were generated outside of the United States. Operations are segmented into personal, commercial and specialty operations, each of which has a track record of consistent strong underwriting profitability.
Chubb has generated favorable profitability during the last five years as demonstrated by an average annual combined ratio of 89.9 percent from 2008 through nine months of 2012, and an average operating return on equity of 14.1 percent for the same period. The company's net earnings for the first nine months of 2012 improved, due largely to lower catastrophe losses. The company reported a consolidated GAAP underwriting combined ratio of 90.1 percent for the period, with catastrophes accounting for 3.0 points to the combined ratio. This compares favorably to a 97.1 percent combined ratio for the first nine months of 2011 that had 11.7 points of catastrophes. Net income for the first nine months of 2012 was $1.4 billion, which equates to a return on equity of 12.2 percent.
COUNTRY Financial PC Insurance Group
A.M. Best has affirmed the financial strength ratings (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of COUNTRY Financial PC Insurance Group members (PC Group) and COUNTRY Life Insurance Co. and its reinsured subsidiary, COUNTRY Investors Life Assurance Co. (collectively known as COUNTRY Financial Life Group). The outlook for the ratings of the PC Group is negative, while the outlook for the ratings of the life/health group is stable.
In addition, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of “a-” of Cotton States Life Insurance Co. (Cotton States Life). The outlook for these ratings is stable.
Concurrently, A.M. Best has withdrawn the FSR of A+ (Superior) and ICRs of “aa-” of Cotton States Mutual Insurance Co. (Cotton States) and its wholly owned subsidiary, Shield Insurance Co. (Shield). Cotton States and Shield were members of the PC Group. The withdrawal of these ratings is due to the merger of Cotton States into COUNTRY Mutual Insurance Co. (COUNTRY Mutual) and Shield into COUNTRY Preferred Insurance Co. (COUNTRY Preferred). The effective date for these mergers was Dec. 31, 2012, with COUNTRY Mutual and COUNTRY Preferred being the surviving entities.
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