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Insurance ratings actions: S&P, Moody's act on WellCare after deal announcement

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.

Life and health

A.M. Best revised the outlooks to negative from stable and affirmed the financial strength rating of B+ (Good) and the long-term issuer credit rating of "bbb-" assigned to U.S. Virgin Islands-domiciled Elan Solutions Inc., which does business as United West Indies Insurance.

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

The revised outlooks reflect Elan Solutions' lower level of risk-adjusted capitalization and greater-than-anticipated operating losses.

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Fitch Ratings affirmed U.K.-based Legal & General Group Plc's long-term issuer default rating at A+.

The agency also affirmed the insurer financial strength ratings of the company's core rated operating entities, Legal and General Assurance Society Ltd., Banner Life Insurance Co. and William Penn Life Insurance Co. of New York at AA-.

Fitch also affirmed Bermuda-based Legal & General Reinsurance Co. Ltd.'s insurer financial strength rating at A+. The outlooks on the ratings are stable.

The ratings reflect Legal & General's strong capitalization, operational scale and market position as one of the leading U.K. life insurers. However, its concentration in the U.K. market is an offsetting factor, as is its high financial leverage. The group's diversification benefit from other markets is limited relative to peers in the AA category.

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Moody's affirmed the B3 corporate family rating of Fort Lee, N.J.-based CD&R TZ Purchaser Inc.

The ratings outlook was changed to negative from stable.

The rating reflects the company's unique direct-to-consumer business model with strong internet capabilities for selling Medicare Supplement and Medicare Advantage products to the U.S. senior market on behalf of major insurance carriers with whom it maintains integrated relationships, Moody's said.

Managed care

S&P Global Ratings affirmed its BB long-term issuer credit rating on Tampa, Fla.-based WellCare Health Plans Inc.

The agency revised its outlook to stable from positive.

The affirmation and outlook revision follow WellCare's announcement that it reached a definitive agreement to acquire Meridian.

S&P believes that the transaction has strategic merit as it will strengthen and expand WellCare's existing Medicaid and Medicare Advantage businesses and provide new pharmacy benefit manager infrastructure and expertise.

The stable outlook reflects S&P's view that WellCare has the business expertise and financial capacity to execute the transaction without affecting its rating.

Also, Moody's placed the Baa2 insurance financial strength rating of WellCare Health Plans subsidiary WellCare of Florida Inc. on review for downgrade after the announcement of the transaction.

The review for downgrade reflects an expected increase in leverage to finance the acquisition as well as standard integration risks associated with a large transaction. Still, the agency said the rating reflected the subsidiary's consistent growth, decent geographic diversity, solid capital levels and low leverage relative to peers.

Multiline

S&P affirmed the BBB- long-term issuer credit and financial strength ratings of Russia-based JSC Sogaz and VTB Insurance Ltd. and revised the outlook on the companies to developing from positive and developing from stable, respectively.

The action comes after Sogaz agreed to acquire 100% of VTB Insurance from Russian government-controlled VTB Bank (PJSC) for an undisclosed sum. Until the deal is closed, VTB Insurance will remain a significant part of VTB Bank in terms of earnings, so it is still considered to have core group status, the agency said.

S&P said the revised outlook reflects its view about the uncertainties surrounding the financial parameters of the acquisition, which could influence capitalization of the merged entity and lead to changes in its dividend and investment policies.

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S&P affirmed its BB+ long-term issuer credit and financial strength ratings on Kazakhstan-based Eurasia Insurance Co. JSC.

The outlook on the ratings remains positive. S&P also affirmed its kzAA- Kazakhstan national scale rating on Eurasia.

The affirmation predominantly reflects the agency's view that Eurasia continues to have a sound competitive standing in Kazakhstan and very strong capital and earnings, partly offset by the marginal quality of its investments.

The positive outlook indicates the potential for a one-notch upgrade over the next 12 months if Eurasia maintains its strong operating performance, in line with S&P's expectations.

Property and casualty

A.M. Best removed from under review with developing implications and upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the long-term issuer credit rating to "a+" from "a-" of U.K.-based EC Insurance Co. Ltd.

The outlook assigned to these ratings is stable.

The ratings were placed under review with developing implications in September 2017 following the announcement that the company's intermediate parent, EC Insurance Holdings Ltd., has entered into an agreement for the sale of the company to Markel Capital Holdings Ltd., the ultimate parent of which is Markel Corp. The acquisition closed in November 2017.

The upgrades reflect the substantial reinsurance support EC Insurance receives from an affiliated company, Markel International Insurance Co. Ltd.

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A.M. Best revised the outlooks to positive from stable and affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of "a-" of Arkansas-domiciled Kinsale Insurance Co.

Concurrently, the agency revised the outlook to positive from stable and affirmed the long-term issuer credit rating of "bbb-" of Richmond, Va.-based Kinsale Capital Group Inc.

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

The revision in the outlooks reflects the company's trend in underwriting and operating performance. The affirmation captures Kinsale Insurance's very strong risk-adjusted capital levels, the management team's long-term experience and focus on underwriting fundamentals.

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A.M. Best affirmed the financial strength ratings of A (Excellent) and long-term issuer credit ratings of "a" of Boston-based Medical Professional Mutual Insurance Co. and its subsidiaries, ProSelect Insurance Co., Preferred Professional Insurance Co. and Coverys Specialty Insurance Co., as well as sponsored risk retention group Coverys RRG Inc.

The outlook of these ratings remains stable.

The agency also assigned a financial strength rating of A (Excellent) and a long-term issuer credit rating of "a" to subsidiary Healthcare Underwriters Group Inc. The outlook assigned to these ratings is stable.

The ratings of Healthcare Underwriters Group recognize the implementation of a quota share reinsurance agreement with Medical Professional Mutual. In addition to substantial reinsurance support, Healthcare Underwriters Group will also benefit from Medical Professional Mutual's support for its policyholders through strong patient safety and risk management programs.

The group's ratings reflect its balance sheet, which A.M. Best categorizes as strongest, marginal operating performance, neutral business profile and appropriate enterprise risk management.

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A.M. Best affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of "a-" of National Guaranty Insurance Co. of Vermont.

The outlook of these ratings remains stable.

The ratings reflect the insurer's very strong balance sheet, strong operating performance, limited business profile and appropriate enterprise risk management. The ratings support its role as a captive insurance company of Waste Management Inc.

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 news brief can be found here, here and here .

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