A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A+’ (Superior) and downgraded the issuer credit ratings (ICR) to “aa-” from “aa” of American Family Life Assurance Company of Columbus (Aflac) and American Family Life Assurance Company of Columbus (Japan Branch) and its wholly owned subsidiary, American Family Life Assurance Company of New York (Aflac NY). However, Best has downgraded the ICR and debt ratings to “a-” from “a” on all the outstanding debt of the ultimate parent, Aflac, Inc. (Columbus, GA). All rating outlooks for the group are stable. “The downgrades reflect the group’s large exposure to European perpetual preferred investments,” said Best. “These holdings are heavily concentrated in the financial sector and more specifically in troubled European financial institutions, which have declined considerably in value recently. Approximately three-tenths of the group’s perpetual preferred exposure were designated Tier 1, representing the highest risk securities.” In addition Best said it remains concerned “by the high concentration of investment exposure within a number of single counterparties.” Best said it “believes that Aflac’s issuer concentration—some of which exceeds 5 percent of statutory capital—demonstrates a weakness in enterprise risk management and therefore is no longer reflective of an ICR of “aa.”
Standard & Poor’s Ratings Services has revised its counterparty credit and financial strength ratings on Scottish Re (U.S.) Inc. (SRUS) to ‘R’ from ‘CCC’. An insurer rated ‘R’ is under regulatory supervision owing to its financial condition. “The ratings on SRUS reflect the regulatory order of supervision issued by the Insurance Commissioner of the State of Delaware on Jan. 5, 2009, and disclosed by the company on Jan. 28, 2009,” explained credit analyst Robert Hafner.
A.M. Best Co. has withdrawn the financial strength rating (FSR) of ‘B+’ (Good) and issuer credit rating (ICR) of “bbb-” and assigned a category NR-5 (Not Formally Followed) to the FSR and an “nr” to the ICR of Hanover Fire and Casualty Insurance Company of Conshohocken, PA, as a result of its merger on December 31, 2008 with Philanthropic Mutual Fire Insurance Company ofLancaster, PA, following approval by the Pennsylvania Department of Insurance.
A.M. Best Co. has affirmed the financial strength rating of ‘A-’ (Excellent) and issuer credit rating of “a-” of Omega US Insurance, Inc., headquartered in Chicago, IL. The outlook for both ratings is stable. Best said the “ratings reflect Omega US’ conservative business plan, experienced management team and the benefits of having a strong balance sheet that is unencumbered by prior year reserve liabilities. Additionally, the ratings reflect the benefits derived from being a subsidiary of Omega Insurance
Holdings Limited (Bermuda), a publicly traded holding company for businesses in Bermuda, United States, London and Germany that focuses on predominantly short-tail property insurance and reinsurance. In addition, the ratings recognize the successful background of the executive team and the well established relationships management has with the existing managing general agent network, which comprise the distribution channel for Omega US’ book of surplus lines business.” Best added that it will “continue to closely monitor the quarterly performance of Omega US to ensure that actual results are in line with the company’s business plan.”