Ratings Roundup

Here are some of the ratings that were issued by A.M. Best Co., Oldwick, N.J.; and Moody’s Investors Service and Standard and Poor’s Corp., both in New York, in the previous week.

Among the ratings that were issued are:

Bankers Life Ins. Co. has had its financial strength rating downgraded to ‘B-‘ (Fair) from ‘B’ (Fair) and the issuer credit rating to ‘bb-‘ from ‘bb’ by A.M. Best. The outlook for both ratings has been revised to ‘negative’ from ‘stable’. A.M. Best said that the action reflects “weak capital levels on both an absolute and risk-adjusted basis” due in part to the company’s increased exposure to below investment grade bonds resulting from downgrades in prime and Alt-A residential mortgage-backed securities.

However, Best also noted Bankers Life’s good surrender charge protection on its in-force annuity portfolio; decreasing disintermediation risk and the recent improvement in the company’s earnings performance.

MBIA Inc. has had its senior debt rating downgraded to ‘Ba3’ from ‘Ba1’ and a ‘negative’ outlook assigned by Moody’s. The rating agency also confirmed the ‘Baa1’ rating of National Public Finance Guarantee Corp. with a ‘developing’ outlook and changed the rating outook of MBIA Insurance Corp. and supported insurance subsidiaries to ‘negative.’

Moody's said that the confirmation of National's rating with a developing outlook, despite its strong capital profile and operational infrastructure, reflects the uncertainty caused by ongoing litigation challenging the recent restructuring of the group, and the extended timeframe over which such uncertainty may persist. Creditors and counterparties have sued MBIA, requesting that the February 17, 2009 restructuring of the group that led to National's capitalization with some of MBIA Insurance Corp's resources be reversed.

The downgrade of MBIA Inc.'s senior debt rating to Ba3, and downgrade of MBIA Insurance Corporation's surplus notes and preferred stocks ratings reflects the continued severe stress faced by MBIA Insurance Corp as a result of its exposure to ABS CDOs and RMBS securities.

Phoenix Cos. Inc.’s universal shelf registration has been assigned a ‘B+’ senior unsecured debt rating. The company’s other ratings are unaffected as is its ‘negative’ outlook. “The negative outlook primarily reflects the risks inherent in managing the competing tasks that Phoenix faces, which are rebuilding statutory capital to levels commensurate with the rating and providing cash to the holding company to cover its obligations. An additional risk is the execution of a new strategic direction for Phoenix of offering private labeling services for other insurance companies.” Moody's assigns Aa3 IFS rating to Principal National Life

Principal National Life Ins. Co., a unit of Principal Financial Group, has been assigned an ‘Aa3’ insurance financial strength rating by Moody’s. “The ratings are based on PNLIC's reinsurance agreement with its sister company, Principal Life Insurance Company (Principal Life -- IFS rating at Aa3, stable), for 100% of its liabilities, and on its full integration with Principal Life. Principal Life is the PFG's primary life insurance operating subsidiary.”

Prudential Financial, Inc.’s senior debt rating of ‘Baa2’ and the ‘A2’ long term financial strength rating of Prudential Ins. Co. of America and its affiliates have been affirmed by Moody’s. Additionally, the outlook on the company has been changed to ‘stable’ from ‘negative.’ The actions were prompted by Prudential’s recent $2.4 billion capital raising effort--$1.4 billion in common equity and $1 billion in senor debt.

However, Moody’s said that it will continue to monitor Prudential’s exposure to investment losses from real estate related, corporate and structured asset classes as well as its exposure to variable annuities.
Sun Life Financial Inc.’s senior unsecured debentures have been assigned an ‘A+’ by Standard and Poor’s. The proceeds from the senior unsecured debt will be used for general corporate purposes and will be treated as operational rather than financial leverage.