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US : top insurance companies not to be downgraded

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Fitch Ratings says it will not change the four ‘AAA’ rated U.S. insurance companies’ Rating Outlooks to Negative from Stable following Monday’s revision of the U.S. government’s ‘AAA’ sovereign Rating Outlook to Negative from Stable.

New York Life Insurance Company, Northwestern Mutual Life Insurance Co., Teachers Insurance and Annuity Association of America, and United Services Automobile Association top-notch ‘AAA’ insurer financial strength ratings are neither directly nor indirectly linked to government support and therefore are not capped at the rating of the U.S. government. Accordingly, the Rating Outlooks for all four groups of companies remain stable.

Fitch maintains its view that each company demonstrates strong levels of capital, liquidity, and franchise value independent of government support. Therefore each group’s ratings and outlooks remain intact despite the U.S. sovereign Rating Outlook action. Furthermore, in the event of a future U.S. sovereign downgrade, we believe it would be reasonable for the four ‘AAA’ companies to maintain ratings potentially one to two notches higher than the U.S. government’s rating.

Ratings actions for the noted U.S. insurers linked to a possible future U.S. sovereign downgrade would occur only if ramifications from a sovereign rating event had widespread negative implications across capital markets and/or if a more severe downturn in the economy were to transpire.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com . All opinions expressed are those of Fitch Ratings.

Source : Market Watch