NEW YORK (
) -- Standard & Poor's on Monday detailed its ratings actions for insurance companies, following the ratings agency's
downgrade of its long-term debt rating for the United States to AA+ from AAA
additional downgrades of government-sponsored enterprises
As a result of the U.S. debt downgraded, S&P also downgraded five insurers to AA+ ratings from AAA, while keeping negative credit outlooks for the group.
S&P lowered its long-term counterparty risk and financial strength ratings for the following companies:
- Knights of Columbus, New York Life Insurance Co.
- New York Life
- Northwestern Mutual
- Teachers Insurance & Annuity Assoc. of America (TIAA)
- United Services Automobile Assoc. (USAA)
At the same time S&P affirmed its AA+ ratings for the following companies:
- Assured Guaranty
- Berkshire Hathaway (BRK.A)
- Massachusetts Mutual
- Western & Southern
In its justification for the insurer downgrades, S&P said it was factoring-in "direct and indirect sovereign risks--such as the impacts of macroeconomic volatility, currency devaluation, asset impairments, and investment portfolio deterioration," and that all 10 insurers "generally have significant holdings of U.S. Treasury and agency securities. For the insurers with the most exposure, these investments constituted as much as 200% of total adjusted capital at year-end 2010."
S&P took pains to underscore the financial strength of the 10 insurers discussed in the ratings agency's report, saying that "very strong financial profiles and favorable business profiles" support the AA+ ratings, and that "these companies maintain very strong capital and liquidity."
In other insurance industry developments Monday, Genworth Financial
(GNW - Get Report)
saw its shares decline 17% to close at $5.63. SNL Financial said the company's risk-to-capital ratio was 25-to-1 as of June 30, with the company's U.S. mortgage insurance operations being boosted by $375 million in common share of Genworth MI Canada, in a transaction that's still subject to regulatory approval.
Written by Philip van Doorn in Jupiter, Fla.
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