15 Insurers See Ratings Updates
Liberty Mutual, Lincoln National, Zurich American Insurance and 12 others receive updates.
Insurance Networking Ratings Corner, December 4, 2012
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:
A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of a- of Affinity Mutual Insurance Co. (AMIC).
The negative outlook reflects the deterioration in AMIC’s underwriting results during 2011 and through the first three quarters of 2012. The deterioration in underwriting results was driven primarily by increases in incurred losses from weather-related events coupled, with AMIC’s historically elevated underwriting expense level and the cumulative impact of persistent soft market conditions on the company’s business.
The affirmation of the ratings reflects AMIC’s solid level of risk-adjusted capitalization, modest underwriting leverage and strong balance sheet liquidity. These positive rating attributes are offset by AMIC’s elevated level of common stock leverage, which results in a heightened exposure to equity market volatility and the aforementioned factors that led to the negative outlook.
Assurant Inc. and its subsidiaries
A.M. Best has affirmed the financial strength ratings (FSR) and issuer credit ratings (ICR) of the property/casualty and life/health insurance subsidiaries of Assurant Inc. (Assurant). Additionally, A.M. Best has affirmed the ICR of “bbb” and debt ratings of Assurant. The outlook for all ratings is stable.
Assurant’s ratings recognize its diverse business mix, established presence in numerous niche markets, strong operating results and capitalization. As of Sept. 30, 2012, Assurant’s unadjusted debt-to-capital and debt-to-tangible capital ratios were 18.2 percent and 21.9 percent, respectively, with a fixed-charge coverage ratio that is well supportive of the ratings. Assurant also maintains a $350 million commercial paper program, which is secured by a back-up $350 million credit facility. The organization also has no debt maturing until 2014, and it maintains solid liquidity.
The ratings for the property/casualty subsidiaries of Assurant, which comprises its property/casualty operations, reflect Assurant’s established presence in various specialty markets, its continued favorable underwriting and operating performance and solid risk-adjusted capitalization.
Moody's has affirmed the A1 insurance financial strength rating of China Life Insurance Co. Ltd. with a positive outlook. The affirmation of China Life's A1 rating continues to reflect its strong brand, exceptional market position and vast domestic distribution network. It also has a liquid investment portfolio, mainly consisting of government and government agency bonds and listed equities. Its capitalization, which has deteriorated, somewhat, because of weak earnings and dividend payout, still is 568.9+ solid.
Moody's has maintained a positive outlook on China Life, solely based on the view of strong support from the Chinese government, which has an effective stake of 68.4% in the company. The Chinese government bond rating is Aa3 with a positive outlook.
Nonetheless, Moody's notes several factors that are putting negative pressure on the standalone credit profile of China Life, namely, the company's volatile profitability; increasing financial leverage; and weak premium growth.
Employers Holdings Inc. and its subsidiaries
Employers Holdings Inc. said A.M. Best affirmed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of “a-“ of Employers Insurance Group and its four pooled property/casualty operating subsidiaries, Employers Insurance Co. of Nevada (EICN), Employers Compensation Insurance Co. (ECIC), Employers Preferred Insurance Co. (EPIC) and Employers Assurance Co. (EAC) and revised the outlook to negative from stable. Concurrently, A.M. Best has affirmed the ICR of “bbb-“of Employers’ parent holding company, Employers Holdings Inc.
A.M. Best has downgraded the financial strength rating to D (Poor) from C++ (Marginal) and issuer credit rating to “c” from “b” of Gramercy Insurance Co. (GIC). The outlook for both ratings is negative. Concurrently, A.M. Best has withdrawn the ratings as GIC has requested to no longer participate in A.M. Best’s interactive rating process.
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