16 Insurers See Ratings Updates
Insurance Networking Ratings Corner, December 25, 2012
S&P said its downgrades of the core operating entities of AXA Group, including AXA Life Insurance, are based on the view that unfavorable investment market conditions and weak economic prospects are likely to dampen the group's earnings growth prospects, despite its actions to deemphasize capital-consuming products and business lines.
The group's risk-adjusted capital adequacy level, according to S&P’s criteria, and its sensitivity to changing market conditions continue to be weaknesses for the financial strength ratings, although S&P believe earnings retention and recently improving investment market conditions have provided capital adequacy support during the last year.
Cincinnati Financial Corp. and its subsidiaries
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-“ for The Cincinnati Insurance Co., The Cincinnati Indemnity Co. and The Cincinnati Casualty Co., collectively referred to as The Cincinnati Insurance Co.s (CIC) standard market property/casualty group. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICR of "a+" of The Cincinnati Life Insurance Co. (Cincinnati Life).
Additionally, A.M. Best has affirmed the ICR of "a-" and debt ratings of CIC and Cincinnati Life's publicly traded parent, Cincinnati Financial Corp. (CINF). The outlook for all ratings is stable.
A.M. Best also has affirmed the FSR of A (Excellent) and ICR of "a" of The Cincinnati Specialty Underwriters Insurance Co. (CSU), a wholly owned, separately rated excess and surplus lines subsidiary of The Cincinnati Insurance Co., the lead property/casualty company. The outlook for CSU remains stable.
Manulife Financial Corp. and its subsidiaries
A.M. Best has affirmed the financial strength ratings (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of the life insurance subsidiaries of Manulife Financial Corp. (MFC). Concurrently, A.M. Best has affirmed the ICR of “a-” as well as all existing debt ratings of MFC. The outlook for all ratings is stable.
The rating affirmations reflect Manulife's solid market position in the global markets, continuing progress in de-risking its balance sheet by reducing its exposure to equity and interest rate risks, and its revised product focus on less capital intensive lines of business, while maintaining adequate regulatory risk-adjusted capitalization, despite low interest rate challenges and restructuring of its business platform. MFC also maintains significant scale in its core business lines and has seen growing assets under management.
A.M. Best notes MFC’s proactive risk management platform, including enhanced risk oversight functions. Over the last few years, MFC's various strategic actions have moderated the impact of the macro-economic challenges and equity market volatility on its consolidated risk profile and balance sheet. Key strategic actions have included accelerated macro and dynamic hedging programs, changes in product design and pricing, and the targeting of specific products for growth in its various geographical markets, while reducing the sales of capital intensive products, especially variable annuities in the United States.
Fitch has affirmed the 'A' Insurer Financial Strength (IFS) ratings of Markel Corp.'s seven principal property and casualty insurance subsidiaries. Fitch also has affirmed the following ratings for MKL:
• Issuer Default Rating (IDR) at 'BBB+'
• Senior, unsecured notes at 'BBB'.
The Rating Outlook is Stable. Fitch's rating action follows the announcement that MKL intends to acquire Alterra Capital Holdings Ltd. (Alterra) for about $3 billion.
The affirmation and Stable Outlook reflects that Alterra's IFS ratings are the same as MKL's. The affirmation also reflects Fitch's view of the transaction as improving the business platform of the combined organization, as well as the complementary and disciplined approach to risk management of the two companies. While the acquisition of Alterra creates some execution risk in integrating the two organizations, Fitch expects this risk to be manageable.
Mutual of Omaha Insurance Co. and its subsidiaries
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of Mutual of Omaha Insurance Co. (Mutual) and its subsidiaries, United of Omaha Life Insurance Co. (United of Omaha), Companion Life Insurance Co. (Companion Life), and United World Life Insurance Co. (United World Life). Concurrently, A.M. Best has affirmed the debt ratings of “a” on the existing $300 million, 6.8 percent surplus note, due 2036; and $300 million, 6.95 percent surplus notes, due 2040, of Mutual. The outlook for all ratings remains negative.
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