WASHINGTON BUREAU — The large mutual life insurers that lost AAA ratings from Standard & Poor’s Ratings Services Monday say the changes have nothing whatsoever to do with their own operations.
Standard & Poor’s, New York, cut the mutual insurers’ prized AAA ratings to AA plus based solely on the principle that U.S. insurers can’t have stronger ratings than the U.S. government, the companies say.
Moody’s Investors Service, New York, and Fitch Ratings, New York, have not cut their ratings on the U.S. government, and executives at New York Life Insurance Company, New York, have pointed out that they have not downgraded the top-ranked U.S. insurers.
“We disagree with S&P’s view that AAA-rated insurers should be adjusted in lockstep with the U.S. Treasury,” New York Life spokesman William Werfelman says.
Both Moody’s and Fitch “are of the opinion that financial institutions can have a higher rating than the federal government, and we agree with their assessment,” Werfelman says.
S&P itself praised the financial profiles and business profiles of the mutual insurers affected by the downgrade of the U.S. government.
In addition to New York Life, the life companies affected were the Knights of Columbus, New Haven, Conn.; Northwestern Mutual Life Insurance Company, Milwaukee; and Teachers Insurance & Annuity Association of America, New York.
Werfelman notes that, for U.S. insurers, AA plus is now the top S&P rating.