15 Insurers See Ratings Updates
Rating agencies review Prudential and The Hartford's financial standing in the wake of last week's $615 million transaction; Montpelier Re, Old Republic and several others also receive updates.
Insurance Networking Ratings Corner, October 2, 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:
American Family Insurance Group
A.M. Best has commented that the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” for the members of the American Family Insurance Group are unchanged.
AMFAM Inc., the direct downstream holding company of the American Family Mutual Insurance Co., has reached an agreement to acquire PGC Holdings Corp. and its subsidiaries, including non-standard auto insurers Permanent General Assurance Corp., Permanent General Assurance Corp. of Ohio, and The General Automobile Insurance Co. The agreement is scheduled to close by the end of 2012.
A.M. Best does not anticipate that the members of the American Family Insurance Group will see a significant change in their risk-adjusted capitalizations, operating performances or business profiles in the near term to midterm, as a result of acquiring the entities within the PGC Holdings Corp.
A.M. Best has assigned an issuer credit rating of “bbb”, a debt rating of “bbb” to the $143.75 million, 6.5 percent senior unsecured notes (including the underwriters’ over-allotment option), due Sept. 15, 2042, and indicative ratings of “bbb” on senior unsecured debt and “bbb-” on subordinated debt of the recently filed shelf registration of Argo Group US Inc. (Argo US). The outlook assigned to these ratings is stable.
The senior notes are fully and unconditionally guaranteed by Argo Group International Holdings Ltd. (Argo Group) and are redeemable on or after Sept. 15, 2017, at 100 percent of their principal amount, plus accrued and unpaid interest at the redemption date.
Argo Group intends to use the net proceeds from the offering for the repurchase of outstanding trust preferred securities, but such proceeds also may be used for general corporate purposes, including the repayment of indebtedness. Argo Group’s total debt-to-capital ratio (excluding accumulated other comprehensive gains) at June 30, 2012, measured about 22 percent, increasing to 26 percent when debt is measured relative to adjusted tangible capital.
Fitch has affirmed all AXA entities' Insurer Financial Strength (IFS) ratings at 'AA-'. Fitch also has affirmed AXA SA's Long-term Issuer Default Rating (IDR) at 'A' and Short-term IDR at 'F1'. The agency has revised the outlooks on the long-term IDR and IFS ratings to negative from stable.
The revision of the Outlook to Negative reflects Fitch's concerns about the group's ability to improve profitability, notably in the context of low interest rates. Fitch recognizes management action aimed at reducing the exposure to financial market movements, but considers this will take some time to achieve results in the context of the group's exposure to a sizeable amount of intangible assets. In addition, Fitch views AXA's 29 percent debt leverage as outside its criteria guidelines for the rating category.
The affirmation of the ratings reflects Fitch's view of the group's solid capital adequacy. As measured by both regulatory calculation and Fitch's internal analysis, the group's capital adequacy is in line with the current rating and is expected to show resilience in the near future despite the volatile financial environment.
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” of the members of the Donegal Insurance Group (Donegal Group). A.M. Best also has affirmed the FSR of A (Excellent) and ICR of “a” of Michigan Insurance Co. (MIC), the stand-alone rated subsidiary of Donegal Group Inc.
In addition, A.M. Best has affirmed the ICR of “bbb” of the group’s publicly traded holding company, Donegal Group Inc. The outlook for all ratings is stable.
The affirmation of the ratings of the Donegal Group’s members is based on their consolidated financial strength, which is reflected by adequate risk-adjusted capitalization, sound balance sheet liquidity, continued positive earnings and good geographic and product line diversification. Although the individual companies within the Donegal Group play a specific role in the organization’s overall business plan and their operating performance may vary, each contributes favorably to the group’s risk-adjusted capitalization. In addition, each of the members supports Donegal Group’s overall business strategy and each benefit from shared senior management and information technology systems, intercompany reinsurance and the added financial flexibility of Donegal Group Inc.
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