Fitch Ratings has placed the 'A+' Insurer Financial Strength (IFS) ratings of Loyal American Life Insurance Company and Central Reserve Life Insurance Company on Rating Watch Negative.
The action follows American Financial Group's (AFG) announcement that it has reached a definitive agreement to sell its medical supplement and critical illness businesses to CIGNA Corporation, whose principal operating subsidiaries carry 'A' IFS ratings.
Five legal entities doing business as Great American Supplemental Benefits Group, including the two above rated entities, will be sold in a transaction expected to close in the later-half of 2012. Fitch expects to resolve the Watch at the close of the transaction at which time the ratings will be downgraded to be commensurate with CIGNA's ratings.
Fitch has also downgraded the two remaining Texas-based life insurance subsidiaries, United Teacher Associates Insurance Company and Continental General Insurance Company, to 'BBB' from 'A+'. The companies discontinued sales of new individual life insurance, annuities and long-term care in 2009 to concentrate on medical supplement and critical illness, and are now in run-off.
The strategic category for the two downgraded companies has been changed to Limited Importance from Very Important, reflecting AFG's unsuccessful efforts to sell the long-term care business as well as announced plans to have an external actuarial study performed on long-term care reserves. The rating could be downgraded further pending the results of the study, or deterioration in RBC to materially below 200% without commensurate capital support from AFG.
Fitch has placed the following 'A+' IFS ratings on Rating Watch Negative:
--Central Reserve Life Insurance Company
--Loyal American Life
Insurance Company
Fitch has downgraded the following IFS ratings and placed them on Rating
Watch Negative:
--United Teacher Associates Insurance Company to
'BBB' from 'A+';
--Continental General Insurance Company to 'BBB'
from 'A+'.
The ratings of American Financial Group, Inc., its property casualty operations, and its two remaining Ohio-based annuity operations are unaffected.
Additional information is available at www.fitchratings.com. The ratings above were unsolicited and have been provided by Fitch as a service to investors.
The issuer did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
Applicable Criteria and Related Research:
--'Insurance Rating
Methodology' (Sept. 22, 2011).
Applicable Criteria and Related Research:
Insurance Rating
Methodology
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