Fitch Nationwide Mutual Life fall after privatization
Thursday, Mar 05,2009, 11:45:34 AM Click:
Fitch Nationwide Mutual Life fall after privatization
Business Editors
CHICAGO - (BUSINESS WIRE) - January 2 2009 - Fitch Ratings has downgraded the Insurer Financial Strength (IFS) rating on Nationwide Mutual Insurance Company (NMIC) and its intercompany pool members (collectively, Nationwide Mutual), as well as Nationwide Life Insurance Company (NWL) and Nationwide Life Insurance Company of America (NWLA) at 'A +' from 'AA-'. In addition, Fitch has downgraded the notes of traffic on NMIC surplus notes to 'A-' from 'A', and the note on the senior unsecured debt of Nationwide Financial Services, Inc. (NFS) to 'BBB +' from ' A-'. A complete list of rating actions can be found below. The Rating Outlook is Negative.
The rating action follows the completion of the privatization of its operations NMIC life insurance, which are held in the NFS. Under the terms of the transaction, NMIC acquired 34% of NFS that does not already own for a purchase price of approximately $ 2.5 billion. The transaction was financed through internal funding provided by NMIC.
The rating downgrade and Outlook revision reflects Fitch believes that this funding has reduced the capital NMIC below the thresholds in relation to prior rating expectations, and concerns about weak operating performance during recent years, significant investment losses in 2008, and the potential for more losses in 2009.
If the transaction does not directly affect the absolute level of capital of NFS, Fitch believes that the overall position of the capital of the largest national organization as moderately weakened by the purchase price allocation to the former shareholders external and flexibility by the decline in access to public equity markets. NFS is considered a very important strategic operation for Nationwide Mutual, the decommissioning of NMIC has a negative effect on ratings and NWL NWLA.
In addition, variable annuity writers like NWL NWLA and are subject to considerable pressure that the decline in market value requires larger reserve account to cover guarantees attached to the variable annuities, the companies sold. While Fitch believes that NWL and have strong NWLA hedging programs to reduce exposure to these guarantees, the companies continue to face a difficult environment in 2009.
Fitch ratings on NMIC and its operating subsidiaries reflect its solid competitive position in the insurance of insurance, diversification in both property and casualty and life insurance products, and a relatively conservative investment. Partially offsetting these strengths is its capital position lower in the wake of the privatization of NFS, the potential exposure to losses on investments by the instability in the capital market and general economic conditions and the society risks associated with asbestos.
Fitch Ratings on NFS and its subsidiaries operating history reflects a strong, diversified revenue streams, the diversity of distribution channels and capital structure reasonably prudent. These positive results were partially offset by negative cash flow in its operation, the exposure of its investment portfolio with the recent turbulence in capital markets, and the extent to which the company's operating earnings are leveraged to equity market.
The revision of the rating Outlook to Negative reflects Fitch believes that NMIC and NFS, as well as many industry participants, face an additional risk of investment losses and gains due to deteriorating economic conditions in 2009. Fitch will work with the management team of the country in the short term to assess the potential loss exposure of the conduct Rating Outlook.
Fitch has downgraded the following and revised the outlook to negative
Nationwide Mutual Insurance Co.
- Issuer Default Rating (IDR) at 'A' from 'A +'
- Notes the excess of 8.25% due December 1, 2031 to 'A-' from 'A';
- 7875% surplus due on 1 April 2033 to 'A-' from 'A';
- 6.60% surplus due 15 April 2034 at 'A-' from 'A'.
Nationwide Mutual Insurance Co.
Nationwide Mutual Fire Insurance Co.
Scottsdale Insurance Co.
Farmland Mutual Insurance Co.
Colonial County Mutual Insurance Company
Nationwide Insurance Company
Nationwide General Insurance Company
Nationwide Lloyds
Nationwide Property & Casualty Insurance Company
Titan Indemnity Company
Titan Insurance Company
Victoria Automobile Insurance Company
Victoria Fire & Casualty Insurance Company
Victoria Select Insurance Company
Victoria Specialty Insurance Company
Scottsdale Indemnity Company
Scottsdale Surplus Lines Insurance Company
Western Insurance Company Heritage
Allied Property & Casualty Insurance Company
AMCO Insurance Company
Depositors Insurance Company
Nationwide Affinity Company
- IFS 'A +' from 'AA-'.
Nationwide Financial Services Inc
- IDR at 'A-' from 'A';
- Senior notes $ 300 million, 6.25%, due November 15 2011 to 'BBB +' from 'A-';
- Senior notes $ 300 million 5.90% due 1 July 2012 to 'BBB +' from 'A-';
- Senior notes $ 200 million, 5625%, due February 13 2015 to 'BBB +' from 'A-';
- Senior notes $ 200 million, 5.10%, due October 1, 2015 to 'BBB +' from 'A-';
- Trust preferred $ 100 million;% in 7899, due 1 March 2037 to 'BBB' from 'BBB +'.
Nationwide Life Insurance Co.
- IFS 'A +' from 'AA-'.
Nationwide Life Insurance Co. of America
- IFS 'A +' from 'AA-'.
Nationwide Life Global Funding I
- Evaluation of Program 'A +' from 'AA-'.
In addition, Fitch affirmed the following:
Nationwide Life Insurance Co.
- Short term IDR at 'F1'
- Short-term IFS to 'F1'
- Commercial paper at 'F1'.
Fitch's rating definitions and conditions of use of these opinions are available on the website of the public body, www.fitchratings.com. Published opinions, criteria and methodologies are available from this site, at any time. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct of this site.
Fitch Ratings
Douglas M. Pawlowski, CFA +1-312-368-2054
Bradley S. Ellis, CFA +1-312-368-2089
Tana M. Higman, +1-312-368-2085 (Chicago)
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga @ fitchratings.com
State Keywords: New York
Industry Keywords: Source: Fitch Ratings
Copyright © 2009 Business Wire Business Editors CHICAGO - - 2 January 2009 - Fitch Ratings has lowered the Note Insurer Financial Strength of Nationwide Mutual Insurance Company and its inter-pool members, and Nationwide Life Insurance Company and Nationwide Life Insurance Company of America, from "A +" and "AA-".
Business Editors
CHICAGO - (BUSINESS WIRE) - January 2 2009 - Fitch Ratings has downgraded the Insurer Financial Strength (IFS) rating on Nationwide Mutual Insurance Company (NMIC) and its intercompany pool members (collectively, Nationwide Mutual), as well as Nationwide Life Insurance Company (NWL) and Nationwide Life Insurance Company of America (NWLA) at 'A +' from 'AA-'. In addition, Fitch has downgraded the notes of traffic on NMIC surplus notes to 'A-' from 'A', and the note on the senior unsecured debt of Nationwide Financial Services, Inc. (NFS) to 'BBB +' from ' A-'. A complete list of rating actions can be found below. The Rating Outlook is Negative.
The rating action follows the completion of the privatization of its operations NMIC life insurance, which are held in the NFS. Under the terms of the transaction, NMIC acquired 34% of NFS that does not already own for a purchase price of approximately $ 2.5 billion. The transaction was financed through internal funding provided by NMIC.
The rating downgrade and Outlook revision reflects Fitch believes that this funding has reduced the capital NMIC below the thresholds in relation to prior rating expectations, and concerns about weak operating performance during recent years, significant investment losses in 2008, and the potential for more losses in 2009.
If the transaction does not directly affect the absolute level of capital of NFS, Fitch believes that the overall position of the capital of the largest national organization as moderately weakened by the purchase price allocation to the former shareholders external and flexibility by the decline in access to public equity markets. NFS is considered a very important strategic operation for Nationwide Mutual, the decommissioning of NMIC has a negative effect on ratings and NWL NWLA.
In addition, variable annuity writers like NWL NWLA and are subject to considerable pressure that the decline in market value requires larger reserve account to cover guarantees attached to the variable annuities, the companies sold. While Fitch believes that NWL and have strong NWLA hedging programs to reduce exposure to these guarantees, the companies continue to face a difficult environment in 2009.
Fitch ratings on NMIC and its operating subsidiaries reflect its solid competitive position in the insurance of insurance, diversification in both property and casualty and life insurance products, and a relatively conservative investment. Partially offsetting these strengths is its capital position lower in the wake of the privatization of NFS, the potential exposure to losses on investments by the instability in the capital market and general economic conditions and the society risks associated with asbestos.
Fitch Ratings on NFS and its subsidiaries operating history reflects a strong, diversified revenue streams, the diversity of distribution channels and capital structure reasonably prudent. These positive results were partially offset by negative cash flow in its operation, the exposure of its investment portfolio with the recent turbulence in capital markets, and the extent to which the company's operating earnings are leveraged to equity market.
The revision of the rating Outlook to Negative reflects Fitch believes that NMIC and NFS, as well as many industry participants, face an additional risk of investment losses and gains due to deteriorating economic conditions in 2009. Fitch will work with the management team of the country in the short term to assess the potential loss exposure of the conduct Rating Outlook.
Fitch has downgraded the following and revised the outlook to negative
Nationwide Mutual Insurance Co.
- Issuer Default Rating (IDR) at 'A' from 'A +'
- Notes the excess of 8.25% due December 1, 2031 to 'A-' from 'A';
- 7875% surplus due on 1 April 2033 to 'A-' from 'A';
- 6.60% surplus due 15 April 2034 at 'A-' from 'A'.
Nationwide Mutual Insurance Co.
Nationwide Mutual Fire Insurance Co.
Scottsdale Insurance Co.
Farmland Mutual Insurance Co.
Colonial County Mutual Insurance Company
Nationwide Insurance Company
Nationwide General Insurance Company
Nationwide Lloyds
Nationwide Property & Casualty Insurance Company
Titan Indemnity Company
Titan Insurance Company
Victoria Automobile Insurance Company
Victoria Fire & Casualty Insurance Company
Victoria Select Insurance Company
Victoria Specialty Insurance Company
Scottsdale Indemnity Company
Scottsdale Surplus Lines Insurance Company
Western Insurance Company Heritage
Allied Property & Casualty Insurance Company
AMCO Insurance Company
Depositors Insurance Company
Nationwide Affinity Company
- IFS 'A +' from 'AA-'.
Nationwide Financial Services Inc
- IDR at 'A-' from 'A';
- Senior notes $ 300 million, 6.25%, due November 15 2011 to 'BBB +' from 'A-';
- Senior notes $ 300 million 5.90% due 1 July 2012 to 'BBB +' from 'A-';
- Senior notes $ 200 million, 5625%, due February 13 2015 to 'BBB +' from 'A-';
- Senior notes $ 200 million, 5.10%, due October 1, 2015 to 'BBB +' from 'A-';
- Trust preferred $ 100 million;% in 7899, due 1 March 2037 to 'BBB' from 'BBB +'.
Nationwide Life Insurance Co.
- IFS 'A +' from 'AA-'.
Nationwide Life Insurance Co. of America
- IFS 'A +' from 'AA-'.
Nationwide Life Global Funding I
- Evaluation of Program 'A +' from 'AA-'.
In addition, Fitch affirmed the following:
Nationwide Life Insurance Co.
- Short term IDR at 'F1'
- Short-term IFS to 'F1'
- Commercial paper at 'F1'.
Fitch's rating definitions and conditions of use of these opinions are available on the website of the public body, www.fitchratings.com. Published opinions, criteria and methodologies are available from this site, at any time. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct of this site.
Fitch Ratings
Douglas M. Pawlowski, CFA +1-312-368-2054
Bradley S. Ellis, CFA +1-312-368-2089
Tana M. Higman, +1-312-368-2085 (Chicago)
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga @ fitchratings.com
State Keywords: New York
Industry Keywords: Source: Fitch Ratings
Copyright © 2009 Business Wire Business Editors CHICAGO - - 2 January 2009 - Fitch Ratings has lowered the Note Insurer Financial Strength of Nationwide Mutual Insurance Company and its inter-pool members, and Nationwide Life Insurance Company and Nationwide Life Insurance Company of America, from "A +" and "AA-".
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