10 Insurers See Ratings Updates
AIG sees ratings update ahead of decision over lawsuit against the federal government; Allstate, Allianz and several others also receive updates.
Insurance Networking Ratings Corner, January 8, 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:
Allianz Global Corporate & Specialty Resseguros Brasil S.A.
S&P assigned its 'A-' financial strength and issuer credit ratings on the global scale and 'brAAA' rating on the national scale to Allianz Global Corporate & Specialty Resseguros Brasil S.A. (AGCS Re Brazil). The outlook on all ratings is stable.
The ratings on AGCS Re Brazil are based on the support from its indirect parent, Allianz Global Corporate & Specialty AG (AGCS AG; AA/Negative/--), the strong level of capitalization that will support growth, the management expertise, the company's previous experience in the Brazilian market as an admitted reinsurer, and the favorable prospects for the Brazilian insurance and reinsurance market. Offsetting factors include AGCS Re Brazil's expected small scale and size in the first couple of years of operations, and its start-up condition and the uncertainties this implies.
AGCS Re Brazil is the Brazilian subsidiary of AGCS AG. Allianz Risk Transfer AG (AA-/Negative/--), a 100 percent subsidiary of AGCS AG, holds 99.99 percent of AGCS Re Brazil, indirectly, through a non-operating Brazilian holding company, and AGCS AG holds the remaining share. The company's ultimate parent is Allianz SE (AA/Negative/A-1+). Under S&P’s group methodology, AGCS Re Brazil is considered highly strategic to its parent, mostly due to its global growth strategy. The Brazilian subsidiary will become a regional hub for South America, a region that is expected to represent a significant share of AGCS's growth markets.
S&P assigned its 'BBB' debt rating to Allstate Corp.'s junior subordinated debentures up to $1 billion, maturing in 2053. S&P expects the debentures to qualify for intermediate content treatment under the criteria for hybrid securities, based on a review of preliminary documentation.
The company intends to use the net proceeds from this issue for general corporate reasons, including share repurchases. Adjusted debt and financial leverage as of Sept. 30, 2012, were conservative at 23.2 percent and 26.6 percent, respectively. Fixed-charge coverage is very strong, improving to 10.3x during the first nine months of 2012, from 2.7x in full-year 2011. On a pro-forma basis, S&P expects financial leverage to be near 30 percent, and fixed-charge coverage to be near 9x for 2012 and 2013.
Moody's has assigned a Baa1(hyb) subordinated debt rating to Allstate’s (senior debt at A3, negative) $500 million issuance of 40-year, 5.10 percent, fixed-to-floating rate debentures. The debenture is a drawdown from a shelf registration filed on April 30, 2012. Proceeds from the offering are expected to be used, primarily, to fund the company's recently announced $1 billion share repurchase program, which is expected to be completed by Dec. 31, 2013, as well as for general corporate purposes. The outlook on the debt rating is negative.
A.M. Best has assigned a debt rating of “bbb+” to the 40-year, $500 million, 5.10 percent fixed-to-floating subordinated debentures recently issued by Allstate. The assigned outlook is stable. All existing ratings of Allstate and its subsidiaries are unchanged.
The assigned rating recognizes Allstate Insurance Group’s solid, risk-adjusted capitalization, generally favorable operating performance and significant market presence. The rating also is indicative of A.M. Best’s view of the group’s near-term earnings prospects, when considering its strong overall business profile as the second-largest personal lines writer in the United States. As of Q3 2012, Allcorp’s debt-to-capital and debt-to-tangible capital ratios were 25.4 percent and 26.7 percent, respectively, and the company continues to maintain a fixed-interest coverage ratio that is supportive of its ratings.
American International Group Inc.
A.M. Best has withdrawn the financial strength rating of A (Excellent) and issuer credit ratings of “a” of six domestic life insurance subsidiaries of American International Group Inc. (AIG): SunAmerica Annuity and Life Assurance Co. (SALAC), SunAmerica Life Insurance Co. (SLIC), Western National Life Insurance Co. (WNLIC), American General Assurance Co. (AGLA), American General Life and Accident Insurance Co. (AGLAIC) and American General Life Insurance Co. of Delaware (AGLICDE).
Effective Dec. 31, 2012, the aforementioned companies merged with and into American General Life Insurance Co. (AGLIC), AIG’s lead U.S. life insurance company. These transactions are part of AIG’s ongoing strategy to streamline its insurance company structure into fewer operating companies in order to maximize efficiency. As a result of the mergers, SALAC, SLIC, WNLIC, AGLA, AGLAIC and AGLICDE policyholders have become policyholders of AGLIC.
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