Sunday, April 19, 2009

Ratings Roundup

The following are some of the ratings issued during the week of April 12 by Moody’s Investors Service and Standard & Poor’s Corp., both in New York.

Ambac Assurance Corp. and Ambac Assurance UK s’ financial strength rating has been downgraded to ‘Ba3’ from ‘Baa1’ by Moody’s. The senior debt rating of Ambac Financial Group was also downgraded to ‘Caa1’ from ‘Ba1.’ The downgrades reflect “weakened risk adjusted capitalization.”

AXA Group’s Japanese Life Insurance Companies had the ‘AA’ financial strength and counterparty credit ratings of AXA Life and the ‘A+’ financial strength and counterparty credit ratings of AXA Financial Life affirmed by S&P. The outlook of the former remains negative while the outlook of AXA Financial Life remains positive. The outlook follows AXA’s announcement that it plans to merge the two units into a company to be called AXA Life. The affirmation reflects S&P’s belief that the company will maintain its core status with the parent.

ING Groep N.V.’s U.S. life insurance subsidiaries have been put on CreditWatch with negative implications by S&P. The action follows the group’s recent announcement that it would undertake a strategic review of its businesses and rationalizing its U.S. operations.

Lincoln National Corp.’s senior debt rating was lowered to ‘Baa2’ from ‘Baa1’ while Lincoln Life Insurance Co.’s insurance financial strength rating has been lowered to ‘A2’ from ‘A1’ by Moody’s. The rating remains on review for a possible further downgrade. The action reflects the agency’s expectations of continued depressed earnings and further investment losses which will constrain already weakened liquidity and financial flexibility and capitalization. Moody’s noted LNC’s VA with guarantees business is exposed to equity markets. The review will also look at whether LNC will receive funding under the U.S. Treasury’s Capital Purchase Program. Failure to receive the funding will make it likely that there will be an additional rating downgrade, Moody’s says.

Wellpoint, Inc. ‘s ratings were affirmed by Moody’s following its announcement that it will sell its NextRx subsidiaries to Express Scripts for $4.7 billion. The outlook on Wellpoint and its subsidiaries remains negative. The sale, according to Moody’s, will allow Wellpoint to improve its financial profile by reducing debt, improving liquidity and strengthening risk-based capital.
Zurich Insurance Company had its financial strength rating, and senior and subordinated debt ratings affirmed at ‘A1,’ ‘A2,’ and ‘A3’ respectively by Moody’s. The ratings of Farmers Insurance Group had its ‘A2’ financial strength rating and ‘Baa2’ surplus notes affirmed. The announcement follows Zurich’s announcement that it will acquire the U.S. Personal Auto Group business of AIG.

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