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Insurance ratings actions: Moody's affirms MassMutual, Oil Insurance

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Insurance ratings actions: Moody's affirms MassMutual, Oil Insurance

S&P Global Market Intelligence compiles ratings actions in the insurance space daily through 5:30 p.m. ET. Actions after 5:30 p.m. ET will be included in the following day's roundup.

Life and health

Moody's affirmed the Aa2 insurance financial strength rating of Massachusetts Mutual Life Insurance Co. but changed the outlook to negative from stable.

The Aa2 insurance financial strength ratings of C.M. Life Insurance Co. and MML Bay State Life Insurance Co., two affiliates that are guaranteed by MassMutual, were also affirmed at Aa2 with a negative outlook.

The affirmation is based on the company's leading position in the individual life insurance market, healthy regulatory capitalization and diversified other businesses, Moody's said, although it added that MassMutual's strengths are offset by weak and somewhat volatile profitability and heavy competition in its markets.

The negative outlook stems from the company's "growing appetite" for, and investment in, higher-risk, asset-generating securitization vehicles, the rating agency said. Although these vehicles are well-managed, Moody's said they expose the company to greater liquidity and credit risk than their book value would indicate in a stress situation.

Managed care

A.M. Best placed under review with negative implications the "bbb" long-term issuer credit rating of Aetna Inc. and the A financial strength rating and "a" long-term issuer credit ratings of the lead operating entity, Aetna Life Insurance Co. The rating agency also placed under review with negative implications the ratings of all other Aetna entities, as well as the long- and short-term issue credit ratings of Aetna.

The actions came after the announcement that CVS Health Corp. agreed to acquire Aetna.

The rating agency said the ratings will remain under review pending the completion of the transaction and it conducts discussions with the new parent regarding the plans for Aetna's insurance subsidiaries.

Property and casualty

S&P Global Ratings placed its issuer and issue credit ratings on Sedgwick Inc. and Sedgwick Claims Management Services Inc. on CreditWatch with negative implications and all its issuer and issue credit ratings on Cunningham Lindsey U.S. Inc. and CL Intermediate Holdings I BV on CreditWatch with positive implications.

The CreditWatch placement follows Sedgwick's announcement that it will acquire Cunningham Lindsey, a lower-rated entity by S&P. The rating agency anticipates the acquisition could close by year-end or possibly in 2018, adding that it expects Cunningham Lindsey's debt to be repaid as part of the deal.

S&P said the combined entity would likely benefit from improved global scale and additional diversity in its products and services.

S&P expects to resolve the CreditWatch placement for Sedgwick by the launch of the transaction financing. At that time, the rating agency said it will likely affirm or lower its ratings on Sedgwick by one notch, depending on its view of the combined business and financial profile characteristics.

If the still-pending deal is approved by regulators and the two companies formally combine, S&P said it will likely affirm or raise its rating by one notch on Cunningham Lindsey, depending on prospective credit characteristics and its strategic importance within Sedgwick. Alternatively, if the transaction does not close, S&P said it will likely remove its rating on Cunningham Lindsey from CreditWatch.

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Moody's affirmed Oil Insurance Ltd.'s A2 insurance financial strength and Baa1 (hyb) preference share ratings.

The outlook for the ratings is stable.

Moody's said that as a result of Oil Insurance's increased equity capital and a material reduction in its risk exposure to potential losses from Atlantic Ocean hurricanes, the company's risk-adjusted capital position is robust. Oil Insurance's credit exposure is well-diversified and of good quality, Moody's said, adding that the company's credit profile is enhanced by the board's ability to allocate any unpaid obligations from defaulting members to the remaining members.

The rating agency also said that Oil Insurance's structural features substantially mitigate its exposure to competitive pressures and volatile pricing trends in the commercial insurance market.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.