Pacific Life's investment losses Prospect

Fitch Ratings Inc. lowered its credit ratings on Newport Beach-based Pacific Life Insurance Co. and its parent company and predicts more investment losses for the life insurer.

New York-based Fitch took Pacific Life and its parent down a notch in its general ratings and for specific debt the company has out.

Fitch’s new ratings for Pacific Life still are well within what is considered investment grade or high quality.

Pacific LifeCorp, a holding company for Pacific Life Insurance, saw its long-term issuer default rating drop to “A-“ from “A.”

Pacific Life's financial strength rating, a benchmark for insurers, was taken from "AA-" to "A+" by Fitch.

The company said it lowered Pacific Life's ratings because of the prospect of weaker earnings, added debt and the prospect of investment losses.

Chief Executive Jim Morris called the ratings change "surprising" given moves to cut risk, raise money and lower expenses at Pacific Life.

The company also saw strong life insurance policy and annuity sales last year, he said.

Pacific Life is the county’s largest privately held company with yearly revenue of $5.2 billion.

The company offers life insurance policies and investments for individuals and companies, counting more than half of the 100 largest U.S. companies as customers.

It also runs Aviation Capital Group, which leases jets to airlines.

Premiums collected make Pacific Life a big investor in stocks, bonds and other assets.

Fitch said it expects “continued deterioration in the commercial real estate market,” which could impact Pacific Life’s investments.

Pacific Life owns commercial real estate as well as bonds based on commercial real estate mortgages. It also holds bonds based on home loans.

The company could see investment losses of $345 million to $545 million this year, according to Fitch.

Pacific Life, which has about $100 billion in assets, said none of its commercial mortgage loans are in default.

Fitch called its investment loss scenario for 2010 “manageable.”