10 Insurers See Ratings Changes
The agencies react to Prudential Financial’s planned acquisition of two AIG companies, while A.M. Best and Moody's update AIG's status after its TARP repayment plan announcement.
Insurance Networking News, October 5, 2010
A.M. Best, Fitch Ratings, Moody’s Investors Service and Standard & Poor's announced ratings updates. The following are some of the most recent:
A.M. Best Co. assigned a debt rating of “bbb+” to the recently issued $132 million, 7% senior unsecured notes due Sept. 30, 2050, of American Financial Group Inc. (AFG). The assigned outlook is stable.
The proceeds from this debt offering will be utilized for general corporate purposes by AFG. Following the issuance of the debt, AFG’s unadjusted debt-to-total capital ratio at year-end 2010 is projected to be less than 20.0%. Both the financial leverage and coverage ratios remain well within A.M. Best’s guidelines for AFG’s debt ratings, and are expected to remain so over the near term.
American International Group Inc.
After the announcement of a plan for American International Group Inc. (AIG) to repay the government, rating agencies issued responses. The announcement of a plan to repay the FRBNY Credit Facility and to convert the various ownership interests of the U.S. Government to common equity, which will ultimately be sold to public investors, marks the beginning of the final phase of the process begun in September 2008 to stabilize AIG, according to A.M. Best. Under the proposal, the line of credit extended to AIG by the FRBNY will be repaid before the end of the first quarter of 2011, primarily using proceeds from the initial public offering of AIA Group Limited (AIA) and the previously-announced sale of American Life Insurance Co. (ALICO) to MetLife, Inc. In addition, most of the preferred interests in special purpose vehicles (SPVs) established to facilitate the sale of AIA and ALICO currently held by the FRBNY will be transferred to the U.S. Treasury Department in a series of transactions.
A.M. Best Co. commented that the issuer credit rating (ICR) of “bbb” of AIG is unchanged. The rating outlook remains negative. The ratings of all AIG subsidiaries are unchanged.
Moody's Investors Service has affirmed the long-term ratings of AIG (long-term issuer rating of A3) following the announcement. Also affirmed were the Aa3 insurance financial strength (IFS) ratings of Chartis U.S. and the A1 IFS ratings of SunAmerica Financial Group (SFG). The rating outlook for these entities remains negative, reflecting the risk that the government would conclude its ownership and support of AIG before the company achieves a full recovery of its core operations and an exit from or de-risking of non-core businesses.
Fairfax Financial Holdings Ltd.
S&P assigned its 'BB' global scale and 'P-3' Canadian scale ratings on Toronto-based Fairfax Financial Holdings Ltd.'s pending issuance of up to C$250 million in preferred shares, with an option on an additional C$50 million available to the underwriters.
Fairfax intends to issue the preferred shares from its current $2 billion universal shelf filing. It will use the proceeds to augment its cash position, to increase short-term investments and marketable securities held at the holding company, to retire outstanding debt and other corporate obligations, and for general corporate purposes.
The ratings on Fairfax reflect its strong business and financial profiles, S&P says. Fairfax, through its insurance operating subsidiaries—including Odyssey Reinsurance, Northbridge Financial units, Crum Forster, and Zenith Insurance—maintains a competitive presence in the North American commercial insurance marketplace, as well as in the global reinsurance market.
FM Global Group and its members
A.M. Best affirmed the FSRs of A+ (superior) and ICR of “aa” of FM Global Group (FM Global) and its lead company, Factory Mutual Insurance Co. (Factory Mutual), and its other members, which include FM Insurance Co. Ltd. (FMI), Appalachian Insurance Co., (Appalachian) and Affiliated FM Insurance (Affiliated FM). The outlook for all ratings is stable.
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Wednesday, October 6, 2010
10 Insurers See Ratings Changes
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