14 Insurers See Ratings Updates
Allstate, Berkshire Hathaway, New York Life and 11 others receive updates.
Insurance Networking Ratings Corner, February 5, 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:
The Allstate Corp. and its subsidiaries
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of all members of Allstate Insurance Group (Allstate).
Concurrently, A.M. Best has affirmed the FSR of A+ (Superior) and ICR of “aa-” of the key life/health insurance members of the Allstate Financial Co.s (Allstate Financial). In addition, A.M. Best has affirmed the debt ratings of “aa-” of the remaining outstanding notes, issued under the funding agreement-backed securities programs of Allstate Financial’s lead life company, Allstate Life Insurance Co. The outlook for all the above ratings is stable.
A.M. Best also has revised the outlook to positive from stable and affirmed the FSR of A- (Excellent) and ICR of “a-” of First Colonial Insurance Co. Additionally, A.M. Best has affirmed the ICR of “a-” and debt ratings of the organization’s ultimate parent, The Allstate Corp. The outlook for these ratings is stable.
American Safety Insurance Holdings Ltd. and its subsidiaries
A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of “a” of the insurance operating subsidiaries of American Safety Insurance Holdings Ltd. (ASI), which include American Safety Casualty Insurance Co., American Safety Indemnity Co., American Safety Reinsurance Ltd. (ASRE) and its affiliate, American Safety Risk Retention Group Inc. Concurrently, A.M. Best has revised the outlook to negative from stable and affirmed the ICR of “bbb” of ASI.
The ratings are based on the consolidated financial condition and operating performance of ASRE and its three U.S. domestic subsidiaries and affiliate (entities), with each one receiving significant quota share reinsurance support from ASRE.
The revised outlook reflects the unfavorable underwriting results reported in 2011 by the ASI subsidiaries, and A.M. Best’s expectation of similar results for 2012, which have been impacted by weather-related losses and unfavorable development in prior-year loss reserves, primarily for business that has been placed in run off. The revised outlook also considers the inherent risks involved in ASI’s anticipated build-out of new and existing lines of business (particularly its excess and surplus lines and reinsurance divisions) through the expansion into new geographic territories, growth, and expansion of its surety business associated with the recent acquisition of the Bluestone Agency in 2012 and the melding of new underwriting teams into ASI’s culture.
Auto Club Insurance Association and its subsidiaries
A.M. Best has downgraded the financial strength rating (FSR) to A- (Excellent) from A (Excellent) and the issuer credit ratings (ICR) to “a-” from “a” of Auto Club Insurance Association (ACIA) and its insurance subsidiaries. The outlook for all ratings has been revised to stable from negative.
The downgrading of the ratings is based on the deterioration in ACIA’s underwriting results and operating earnings, which has led to a decline in policyholders’ surplus in recent years. The deterioration in underwriting results was driven by unfavorable loss experience for private passenger auto liability and non-Michigan business, as well as an increased frequency and severity of homeowner weather losses.
In addition, the group maintains above-average, non-affiliated investment leverage, driven by its investment holdings in unaffiliated common stock and bank loans, which equate to about 30 percent of surplus, and its non-investment grade bond holdings, which equate to about 10 percent of surplus.
Fitch has assigned an 'A+' rating to the $2.6 billion of senior, unsecured notes, issued by Berkshire Hathaway Inc.
The issuance consists of the following: $300 million of 0.8 percent notes, maturing in 2016; $800 million of 1.55 percent notes, maturing in 2018; $500 million of 3 percent notes, maturing in 2022; and $1 billion of 4.5 percent notes, maturing in 2043. Proceeds from the senior notes are to be used to redeem $2.6 billion in senior, unsecured notes, maturing on Feb. 11, 2013, and, consequently, financial leverage ratios will not change.
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