10 Insurers See Ratings Changes
A.M. Best, Fitch Ratings, Moody’s Investors Service and Standard & Poor's announced ratings updates. The following are some of the most recent:
Fitch Ratings and S&P reacted to the announcement that MetLife Inc. has closed on its agreement with AIG to acquire American Life Insurance Co. (ALICO) in a transaction valued at over $15 billion.
Fitch upgraded to 'AA-' from 'A+' the insurer financial strength rating assigned to ALICO. At the same time, Fitch affirmed all existing ratings assigned to MetLife Inc. and its subsidiaries. The rating outlook is stable. The rating upgrade is based on ALICO's strong stand-alone credit profile and the application of Fitch's group rating methodology. Fitch considers ALICO to be a core subsidiary of MetLife and an integral and key part of MetLife's international expansion strategy and has a well-established track record of success in its chosen markets.
The affirmation of MetLife's ratings reflects Fitch's view that the longer-term strategic and financial benefits of the proposed acquisition of ALICO largely offset near-term concerns regarding transaction financing and integration. MetLife's ratings continue to reflect the company's strong balance sheet fundamentals, excellent financial flexibility, and market leading competitive positions in several major insurance product lines and markets in the United States, the rating agency says. MetLife's stable outlook reflects, in part, Fitch's view that the company's exposure to future investment losses under Fitch's base case loss scenario is manageable in the context of the company's statutory capital and projected operating earnings. Fitch notes that investment losses realized in the first half of 2010 have declined significantly relative to prior year, consistent with industry peers.
S&P revised its outlook on ALICO to positive from negative and affirmed its 'A+' counterparty credit and financial strength ratings on ALICO. The ratings on MetLife and its operating subsidiaries are unchanged by this event. S&P affirmed the MetLife ratings upon completion of the company's debt and equity issuance to external investors, which raised the capital required to fund this acquisition. The outlook on the MetLife companies remains negative.
The rating agency says ALICO has a strong stand-alone credit profile is a strategically important subsidiary to the MetLife group. ALICO will play a critical role in MetLife’s pursuit of international growth and a shift in its business mix toward more lower-risk products, S&P says. In addition, ALICO has formidable market positions in Japan and Eastern European countries and will complement MetLife’s current international footprint while leveraging ALICO’s strength of global diversification.
The positive outlook on ALICO reflects S&P’s view that upon successful progress of integration, it would view ALICO as core to the MetLife organization over the next 12-18 months and would align the ratings with the MetLife group ratings to reflect the core status. The negative outlook on MetLife and its core operating subsidiaries reflects uncertainty regarding the operational and integration risks associated with the acquisition of ALICO as well as the need to build operating company capital up to 'AA' levels, S&P says. The outlook also reflects the need for enhanced international risk controls within MetLife's enterprise risk management framework.
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Best way of describing this article would be either as a State of the Union or The Queen’s Speech depending on your location. The article goes on into detailed analysis of each company’s performance and outlook from the top raters in the financial market, the above is the start and general overview. Overall, things are looking promising for the life insurance market I think you’ll agree.
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