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In This List

Insurance ratings actions: S&P downgrades Cigna, subsidiaries

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Insurance ratings actions: S&P downgrades Cigna, subsidiaries

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

U.S. and Canada

A.M. Best downgraded the financial strength rating to B++ from A- and the long-term issuer credit rating to "bbb+" from "a-" of Amalgamated Casualty Insurance Co.

The outlook of these ratings was revised to negative from stable.

The ratings reflect the company's very strong balance sheet, adequate operating performance, limited business profile and marginal enterprise risk management.

The downgrades reflect a revision in A.M. Best's assessment of the company's enterprise risk management to marginal from appropriate. The company does not have a formal enterprise risk management program. The enterprise risk management assessment was revised due to a significant downturn in the company's operating performance associated with its expansion initiatives into noncore commercial auto lines and into new territories.

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A.M. Best revised the outlook of the long-term issuer credit rating to stable from negative and affirmed the long-term issuer credit rating of "cc" of First Acceptance Corp.

The agency also revised the outlooks to stable from negative and affirmed the financial strength ratings of C++ and the long-term issuer credit ratings of "b" for First Acceptance Insurance Co. Inc., First Acceptance Insurance Co. of Georgia Inc. and First Acceptance Insurance Co. of Tennessee Inc., collectively referred to as First Acceptance Group.

The ratings reflect First Acceptance Group's weak balance sheet, marginal operating performance, limited business profile and marginal enterprise risk management. The outlook revisions are based on the stabilization in the group's earnings in 2018.

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A.M. Best affirmed the long-term issuer credit rating of "bbb+" of Glen Allen, Va.-based Markel Corp.

The agency also affirmed the financial strength rating of A and the long-term issuer credit ratings of "a+" of most of the members of the Markel North America Insurance Group.

These members are Markel Insurance SE, Essentia Insurance Co., Evanston Insurance Co., FirstComp Insurance Co., Markel American Insurance Co., Markel Insurance Co., Markel International Insurance Co. Ltd. and EC Insurance Co. Ltd.

A.M. Best withdrew the ratings of EC Insurance following management's request to no longer participate in its credit rating process.

Concurrently, A.M. Best affirmed the financial strength ratings of A and the long-term issuer credit ratings of "a" of Markel Bermuda Ltd. and its affiliates, Alterra America Insurance Co. and Markel Global Reinsurance Co. The outlook of these ratings is stable.

At the same time, A.M. Best upgraded the long-term issuer credit ratings to "a+" from "a" and affirmed the financial strength ratings of A of SureTec Insurance Co. and SureTec Indemnity Co. The outlook of the long-term issuer credit rating was revised to stable from positive while the outlook of the financial strength rating remains stable. These two companies are now members of the Markel North America Insurance Group.

Concurrently, the agency upgraded the long-term issuer credit ratings to "a+" from "a" and affirmed the financial strength ratings of A of State National Insurance Co. Inc. and its subsidiaries, which operate under a pooling agreement. The subsidiaries are National Specialty Insurance Co., United Specialty Insurance Co., City National Insurance Co. and Independent Specialty Insurance Co.

The outlook of the long-term issuer credit rating was revised to stable from positive while the outlook of the financial strength rating remains stable.

The ratings of the Markel North America Group, which is considered the lead rating unit in the Markel enterprise, reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.

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A.M. Best affirmed the long-term issuer credit rating of "bbb-" of Stamford, Conn.-based Independence Holding Co. and the financial strength ratings of A- and the long-term issuer credit ratings of "a-" of its subsidiaries.

The subsidiaries are Independence American Insurance Co., Madison National Life Insurance Co. Inc. and Standard Security Life Insurance Co. of New York. The outlook of these ratings is stable.

The ratings reflect the subsidiaries' balance sheet strength, which A.M. Best categorizes as strongest, as well as their adequate operating performance, limited business profile and appropriate enterprise risk management.

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Moody's affirmed the Aa2 long-term issuer rating and the Prime-1 short-term issuer rating of Omaha, Neb.-based Berkshire Hathaway Inc. after affirming the ratings of Berkshire's main reinsurance subsidiaries.

The outlook for Berkshire is stable.

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S&P Global Ratings downgraded its issuer credit rating on Cigna Corp. to A-/A-2 from A/A-1 and the financial strength and issuer credit ratings on its operating subsidiaries, Connecticut General Life Insurance Co. and Cigna Health and Life Insurance Co. to A from AA-.

The agency removed all ratings from CreditWatch with negative implications, where they were placed initially on March 8. The outlooks are negative.

Cigna's acquisition of Express Scripts Holding Co. will result in a stronger business than the companies on their own, but with integration/client-retention risks and elevated financial leverage, 49% post-close, in 2019 to 2020, S&P said.

The agency added that the negative outlooks reflect the potential for one-notch downgrades in 2019 to 2020 if Cigna encounters business and/or integration setbacks and cannot reduce leverage to below 40%.

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S&P upgraded with a stable outlook the long-term issuer and insurer financial strength ratings on U.S.-domiciled Iron Horse Insurance Co. and Bermuda-domiciled Traders Insurance Ltd. to AA- from A+ after upgrading parent company Chevron Corp.

The agency said the companies are highly strategic subsidiaries to the parent.

Europe

A.M. Best affirmed the financial strength rating of A- and the long-term issuer credit rating of "a-" of France-based Société Hospitalière d'Assurances Mutuelles.

The outlook of these ratings remains stable.

The ratings reflect the company's very strong balance sheet, adequate operating performance, neutral business profile and appropriate enterprise risk management.

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S&P placed its BBB- long-term issuer credit and financial strength ratings on Russia-based insurers OJSC SOGAZ and VTB Insurance Ltd. on CreditWatch with developing implications after SOGAZ acquired VTB Insurance.

The agency now considers VTB Insurance to be core to SOGAZ, and expects it to be merged into SOGAZ by 2020.

S&P believes that SOGAZ has not used any external financing to complete the transaction, which has been fully financed via internal resources.

Middle East and Africa

A.M. Best revised the outlooks to negative from stable and affirmed the financial strength rating of B+ and the long-term issuer credit rating of "bbb-" of Lebanon-based Arab Reinsurance Co. SAL.

These ratings reflect Arab Reinsurance's very strong balance sheet, marginal operating performance, neutral business profile and appropriate enterprise risk management.

The revision of the outlooks to negative reflects pressures on the business profile assessment, stemming from A.M. Best's concerns over Arab Reinsurance's strategic direction, in a context of increasingly challenging market conditions.

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A.M. Best affirmed the financial strength rating of A and the long-term issuer credit rating of "a" of Qatar Insurance Co. SAQ and its primary subsidiary Qatar Reinsurance Co. Ltd.

The outlook of these ratings is stable.

The ratings reflect Qatar Insurance's very strong balance sheet, strong operating performance, neutral business profile and appropriate enterprise risk management.

Asia-Pacific

A.M. Best affirmed the financial strength rating of A- and the long-term issuer credit rating of "a-" of New Zealand-based Fidelity Life Assurance Co. Ltd.

The outlook of these ratings is stable.

The ratings reflect Fidelity Life's very strong balance sheet, adequate operating performance, neutral business profile and appropriate enterprise risk management.

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Fitch Ratings affirmed with stable outlooks South Korea-based Hanwha Life Insurance Co. Ltd.'s insurer financial strength rating at A+ and its long-term issuer default rating at A.

The agency noted the company's strengthening capitalization, solid business franchise, extensive distribution network and consistently favorable operating results.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this feature can be found here, here and here.

Links are current as of publication time; S&P Global Market Intelligence is not responsible if those links are unavailable later.