S&P Puts Nationwide Financial on CreditWatch Negative

August 9, 2001

Standard & Poor’s placed its ratings on Nationwide Financial Services Inc. (NFS) and related entities on CreditWatch with negative implications. At the same time, S&P placed its ratings on Provident Mutual Life & Annuity Co. of America (PMLAA) and Provident Mutual Life Insurance Co. (PMLIC) on CreditWatch with positive implications.

These rating actions follow NFS’s announcement that it has signed a definitive agreement under which it will acquire PMLAA in a sponsored demutualization.

S&P placed its ratings on NFS on CreditWatch negative because of concerns over the pro forma consolidated capitalization of the combined insurance operations and the potential integration risk associated with combining the product and distribution capabilities of each organization.

Another concern is the ability of the combined management team to navigate through the demutualization process while maintaining a strong franchise. Notwithstanding these concerns, S&P believes the transaction makes strategic sense given the potential benefits of increased market share in variable life insurance and expanded distribution outlets.

The ratings on PMLAA and PMLIC were placed on CreditWatch positive because of the benefits that the organizations would receive through their ownership by NFS.

NFS is a provider of long-term savings and retirement products in the U.S. The company develops and sells a diverse range of products, including individual annuities, private- and public-sector pension plans and other investment products sold to institutions, life insurance, mutual funds, and other asset-management services.

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