Litigation

Allstate Life Insurance Company in Ratings Downgrade by S&P, Fitch, But A.M. Best Affirms Rating

By John Darer

While A.M. Best affirmed Allstate Life Insurance Company at A+ (Superior) this week, both Fitch and Standard & Poors have lowered their ratings on the company to A (Strong) and AA- (Very Strong) respectively. The ratings also apply to Allstate Life Insurance Company of New York.

A.M. Best

..."The ratings of the primary life/health members of Allstate Financial "continue to reflect the financial strength and support from its direct parent, Allstate Insurance Company (AIC)," the analysis continued. "To offset statutory net losses incurred in 2008, AIC provided ALIC with $1.75 billion in capital contributions." Best said it "believes this support demonstrates Allcorp's commitment to Allstate Financial and that its operations remain strategically important to the Allstate Group."

Best also indicated that in "response to the current economic climate, Allstate Financial has initiated a number of actions to reduce risk and improve returns such as reducing its concentration in spread-based products, maintaining high liquidity in the investment
portfolio and decreasing the number of product offerings."...

Fitch Ratings

..."The life operations received $1.8 billion of additional capital from the holding company and AIC (Allstate Insurance Company) during 2008 as well as benefiting from an accounting change that added $350 million to statutory surplus. The 'standalone' financial strength ratings of Allstate's life operation is lower than the current 'A' level. The lower standalone rating reflects its more troubled assets relative to the property/casualty operation, liquidity needs from institutional product maturities, and generally weak performance. The current ratings on the life insurance subsidiaries receive an uplift due to the Capital Support Agreement from AIC and their access to company credit facilities."...

Fitch defines an "A" rating as "Strong". 'A' IFS ratings denote a low expectation of ceased or interrupted payments. They indicate strong capacity to meet policyholder and contract obligations on a timely basis. This capacity may, nonetheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.

Full post as published by Structured Settlements 4Real on February 04, 2009 (boomark / email).