7 insurers see ratings updates

Prudential Financial Inc.

S&P assigned its 'A' senior unsecured debt ratings to Prudential Financial Inc.'s (PRU) $500 million, 3.00% medium-term notes (MTN) Series D, due 2016, and $300 million, 5.625% medium-term notes Series D, due 2041.

The ratings on the senior unsecured issues reflect S&Ps 'A' counterparty credit rating on PRU, which reflects a nonstandard two-notch gap from the core insurance operating company ratings. Typically, the credit rating on a holding company is a full rating category below the ratings on the operating companies. The nonstandard notching reflects PRU's diverse sources of earnings from regulated U.S. and international insurance operations, as well as asset management subsidiaries, largely unrestricted. S&P expects that the company will use a portion the proceeds from these offerings to fund $350 million of MTNs maturing in December 2011, and the remainder for general corporate purposes.

Moody's has rated Prudential Financial Inc.'s (senior debt at Baa2, stable outlook) $800 million senior debt issuance (a draw down from Prudential's existing shelf registration, split between $500 million with a five-year maturity and $300 million with a 30-year maturity) at Baa2 (stable outlook). The proceeds of the proposed issuance are expected to be used for general corporate purposes and refinancing of an upcoming debt maturity.

Moody's said the debt serves as a refinancing of $350 million of debt maturities coming due in December 2011, and the agency views it as a credit-neutral event. Moody's said Prudential's Baa2 senior unsecured debt rating, and the A2 insurance financial strength rating of its U.S. life insurance operating companies, are based primarily on the group's strong brand name and leading market positions for a number of life insurance offerings. These offerings include individual life insurance, variable annuities, group life, and retirement and stable value products. The company's strengths also include its international business franchises, diversified core earnings base, and good capital position.

Liberty Mutual Group Inc.

A.M. Best has assigned a debt rating of bbb to the newly issued $600 million 5.00% senior unsecured notes, due 2021, issued by Liberty Mutual Group Inc. (LMGI). The assigned outlook is negative. The existing ratings of LMGI and its subsidiaries are unchanged.
A.M. Best anticipates that the proceeds from this issuance will be used for general corporate purposes, including funding LMGIs previously announced tender offer for its 7.50% senior notes, due 2036. Following the issuance, the new debt should result in the companys debt-to-capital ratio being about 25%. LMGIs debt-to-capital ratio was 25.1% at Dec. 31, 2010, which was down from 28.1% at Dec. 31, 2009.

The companys financial leverage and coverage ratios are both within A.M. Bests guidelines for the companys current ratings and are expected to remain so during the near term.

Moody's has assigned a Baa2 rating to the senior unsecured notes of LMGI. The notes mature in 2021 and rank equally with LMGI's existing and future unsecured senior indebtedness, and are irrevocably and unconditionally guaranteed, on a senior unsecured basis, by each of Liberty Mutual Holding Co. Inc. and LMHC Massachusetts Holdings Inc. Net proceeds from the notes offering are expected to be used for general corporate purposes, which may include capital contributions to one or more of the company's insurance subsidiaries to support further business growth. The outlook for the ratings is stable.

Moody's A2 insurance financial strength ratings on Liberty Mutual Group Inc.'s (LMGI or Liberty) principal operating subsidiaries and the Baa2 senior unsecured debt rating of LMGI are based on the group's solid market position in both commercial and personal lines insurance as the third-largest property/casualty insurance group in the United States, and its significant international presence; on the breadth of its product and distribution platform; and on the group's overall strong asset quality and good profitability in recent years.

Highmark Inc.

A.M. Best has assigned debt ratings of a- to $350 million, 4.75% senior unsecured notes, due 2021, and $250 million, 6.125% senior unsecured notes, due 2041, issued by Highmark Inc. The outlook assigned to both ratings is stable.

A.M. Best anticipates that the proceeds from these issuances will be used for general corporate purposes, which could include the repayment of short- and long-term debt. The existing ratings of Highmark and its subsidiaries are unchanged.

The new debt issuances will increase the companys debt-to-capital ratio to about 20%. Highmarks debt-to-capital ratio was about 11.9% at Dec. 31, 2010. The companys financial leverage and coverage ratios are within A.M. Bests guidelines for the current ratings, and are expected to remain so during the near term.

Highmark reported strong underwriting and net income results in 2010, driven by a moderated medical trend as well as corporate initiatives to reduce administrative cost. It is anticipated that underwriting and net income results will continue to remain positive. Capitalization has continued to strengthen through the retention of positive net income, along with retained earnings and the stabilization of the market value of the organizations investment portfolio.

Genworth Financial Inc. and its subsidiaries

Moody's has confirmed the debt ratings of Genworth Financial Inc. (Genworth), as well as the A2 insurance financial strength (IFS) ratings of the company's primary life insurance operating subsidiaries and the A1 IFS rating of Genworth Financial Mortgage Insurance Pty. Ltd. (Genworth Australia). In the same action, Moody's lowered the IFS rating of Genworth Mortgage Insurance Corp. and its supported affiliates (collectively, GMICO) to Ba1 from Baa2. The rating actions conclude a review for downgrade that was initiated on Feb. 3, 2011. The outlook on Genworth and all of its affiliates is negative.

Moodys said the confirmation of Genworth Financial and it's life insurance operating subsidiaries reflects the strong holding company liquidity position ($1.3 billion as of March 31, 2011), the additional financial resources available ($1.5 billion of its investment in the Canadian mortgage insurer), and the improvement in the company's ability to manage through a life company stress scenario.

Furthermore, while continued uncertainty and downside risks with GMICO still exist, the degree of support required from the rest of the company in a stress scenario appears to be manageable in the context of capital for Genworth overall. The rating agency noted that the confirmation of the holding company's ratings also reflects the expectation that Genworth will reduce financial leverage (the company has publicly stated a target of 20% by year-end 2012) and maintain strong liquidity at the holding company.

The Allstate Corp.

A.M. Best said that the financial strength rating of A+ (Superior) and issuer credit ratings of aa- of Allstate Insurance Group (Allstate) and its members, led by Allstate Insurance Co., are unchanged following the announcement that The Allstate Corp. (Allcorp) has signed a definitive agreement with White Mountains Insurance Group Ltd. to acquire Esurance Insurance Co. and its subsidiaries, Esurance Insurance Co. of New Jersey and Esurance Property & Casualty Insurance Co.

Under the terms of the agreement, which also includes the purchase of Answer Financial Inc., Allcorp will pay $700 million, plus the tangible book value of all the entities acquired at the close of the transaction. The total price is expected to be about $1 billion. The transaction has been approved by both companies boards of directors and is expected to close in the fall of 2011, pending regulatory approvals.

Esurance sells personal automobile insurance directly to customers online and through call centers. Answer Financial Inc., as a personal lines insurance agency, allows clients to compare quotes and purchase insurance through its Website and store fronts. These acquisitions are expected to further Allstates strategy of utilizing different value propositions for distinct customer segments. A.M. Best believes the transaction will improve Allstates overall market position by expanding its distribution capacity in the growing direct channel.

Aflac Inc.

Moody's affirmed the debt ratings of Aflac Inc. (senior debt at A2) and the Aa2 insurance financial strength rating of its operating subsidiary, American Family Life Assurance Co. of Columbus. Moody's also maintained the negative outlook on the ratings.

The rating agency said that the affirmation of Aflac's ratings reflects the continued strength of the company's business franchise and the resiliency of its financial profile. The financial profile of the company is further supported by its strong earnings capacity, with very consistent performance during the financial downturn, strengthened capital position, and modest financial leverage.

Commenting on maintaining the negative outlook on Aflac, Moody's said the company still faces significant risks, including investment portfolio concentrations, potential impacts from the Fukushima Daiichi nuclear reactors and threats to the U.S. supplemental health business from health care reform. Recently, the company announced its plans to significantly reduce its concentrated investment portfolio.

Aetna Inc.

Moody's has assigned a Baa1senior unsecured debt rating to Aetna Inc.'s (senior debt at Baa1/stable) issuance of $500 million of new long-term debt. The outlook on the rating is stable.
The debt issuance is a draw on the company's shelf registration, which it filed in December 2008. Aetna expects to use the net proceeds for repayment of $450 million of senior notes, due in June 2011, and for general corporate purposes.

As a result, Moody's notes that there will be no appreciable change in Aetna's adjusted financial leverage (debt to capital where debt includes pension obligations and operating leases), which was 35.1% as of March 31, 2011, and is in line with Moody's expectation for the company's current rating level.

S&P assigned its 'A-' rating on Aetna Inc.'s issuance of $500 million of 10-year senior unsecured notes. Aetna is expected to use the majority of the proceeds from the notes to repay its 5.75% senior notes, due on June 15, 2011. In the interim, the company is expected to use the proceeds for general corporate purposes, including repayment of short-term debt.

Ratings on Aetna (A-/Stable/A-2) are based on the company's well-diversified market profile, improved and stabilized operating performance, strong cash flow generation and liquidity, and very strong financial flexibility. Partially offsetting these positive factors are Aetna's exposure to stressed industry fundamentals and its relatively aggressive share repurchase and stockholder dividend strategy.