Allstate, Humana and 11 Others See Ratings Updates
Manulife Financial's outlook slides; CNA, FM Global and several others also receive updates.
Insurance Networking Ratings Corner, February 21, 2012
A.M. Best, Fitch Ratings released ratings updates. The following are some of the most recent:
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Fitch has affirmed the 'A-' Issuer Default Rating (IDR) of The Allstate Corp. (Allstate) as well as the 'A+' Insurer Financial Strength (IFS) ratings of Allstate Insurance Co. and its property/casualty subsidiaries, and the 'A-' IFS ratings of Allstate Life Insurance Co. and the other life subsidiaries. In addition, Fitch has assigned a 'BBB+' rating to Allstate's $500 million, senior unsecured debt issuance. The rating outlook is stable.
Key issues supporting the rating are Allstate's market position as a top-tier personal lines writer and acceptable capitalization at the operating subsidiaries. Balanced against these strengths was profitability, challenged by catastrophe losses, life operations undergoing a strategic shift, and remaining unrealized losses on asset-backed securities.
Allstate has the second leading market position in both private passenger auto and homeowners insurance, behind State Farm Mutual Automobile Insurance Co. Allstate's acquisition of Esurance gives it access to direct distribution in an effort to compete more effectively against fast-growing peers, GEICO and Progressive.
American Equity Investment Life Holding Co.
Fitch has affirmed the Issuer Default Rating (IDR) of American Equity Investment Life Holding Co. (AEL) at 'BB+' and the Insurer Financial Strength (IFS) ratings of its insurance operating subsidiaries, American Equity Investment Life Insurance Co. and American Equity Investment Life Insurance Co. of New York, at 'BBB+'. The rating outlook is stable.
Fitch views AEL's chief credit strengths to be:
• A high credit quality bond portfolio
• Good operating results
• Adequate, risk-adjusted capitalization
• Strong competitive position in the fixed-indexed annuity market.
Fitch considers AEL's bond portfolio to be of high credit quality, although there has been a shift to lower quality, yet still investment grade, bonds in recent years. At Sept. 30, 2011, U.S. government-sponsored agencies accounted for about 20 percent of fixed-income securities, and 99 percent of the portfolio was investment grade, according to NAIC standards. Given the composition of the investment portfolio, AEL had comparably less investment-related losses during the recent period of challenging capital markets than many of its peers. As the composition of AEL's portfolio continues to change, as certain fixed-maturity securities are subject to call redemption, Fitch expects credit risk will rise to levels more consistent with historical life insurance industry averages.
Fitch has affirmed the following ratings on CNA Financial Corp. (CNA):
• Issuer Default Rating (IDR) at 'BBB'
• Senior debt at 'BBB-'.
Fitch also has affirmed the 'A-' Insurer Financial Strength (IFS) ratings of CNA's property/casualty insurance subsidiaries. The rating outlook is stable.
Fitch's rating rationale for the affirmation of CNA's ratings reflects the financial and implicit support received from CNA's parent company, Loews Corp. (about 90 percent ownership of CNA; IDR 'A+' by Fitch); the company's improvements in capitalization and earnings; and CNA's established position in the commercial lines property/casualty market. The ratings also reflect anticipated challenges in a competitive property/casualty market rate environment, and the potential for additional adverse reserve development on older accident years and in runoff operations.
Fitch's rating rationale continues to recognize Loews' ownership of CNA, as the company benefits from the financial flexibility of a strong majority owner and is able to manage the company with a more long-term approach. Loews has demonstrated its support of CNA during the years through various actions that have improved CNA's capitalization. Fitch views Loews' continued commitment as a critical factor in serving as a support floor for CNA's current ratings.
CUNA Mutual Financial Group Inc.’s life subsidiaries
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a” of CMFG Life Insurance Co. (formerly CUNA Mutual Insurance Society) (CMFG Life). A.M. Best also has affirmed the debt rating of “bbb+” on the $85 million, 8.5 percent, 20-year surplus note, issued by CMFG Life. Additionally, A.M. Best has affirmed the FSR of B++ (Good) and ICR of “bbb+” of MEMBERS Life Insurance Co. (MLIC), a subsidiary of CMFG Life. Both companies are subsidiaries of CUNA Mutual Financial Group Inc. The outlook for all ratings is stable.
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