Insurer Defends Finances

But S&P notes that Phoenix has reported a $16 million Generally Accepted Accounting Principles operating loss for the second quarter, a 13% decrease in the statutory surplus and asset valuation reserve, and higher-than-expected death claims, and that capital levels have been lower than S&P expects to see in companies with the ratings that Phoenix and its subsidiaries have carried.

Wehr says his statement that Phoenix strongly disagrees with S&P and believes the rating agency’s actions were “excessive and precipitous.”

“We believe our actions over the last few months have demonstrated progress and produced results for Phoenix’s financial health and stability,” Wehr says. “Our capital levels are sound, based on regulatory capital ratio requirements.”

Phoenix has cut its workforce by more than 35% and is on track to achieve $110 million in cost savings per year, Wehr says.

Phoenix also has a healthy balance sheet, with no debt maturing until 2032; a solid investment portfolio; $13.8 billion in reserves; more than $1 billion of liquid assets at the life company; and enough holding company liquidity to cover more than 2 years of interest and operating expenses, Wehr says.

“We are committed to rebuilding Phoenix and appreciate the ongoing support of our regulators, policyholders, investors and employees,” Wehr says. “We believe that S&P’s actions do not recognize the underlying financial strength of our company and encourage these key constituents to consider all of the facts when assessing our financial strength.”