A.M. Best has affirmed its mediocre credit and debt ratings for The Phoenix Cos.’ insurance units, saying they will stay that way until the Hartford insurer catches up on regulatory filings and fixes its financial-reporting controls.
New Jersey-based Best is one of several credit- and debt-rating services that Wall Street investors use to assess insurers’ financial-risk profiles.
According to Best, it affirmed financial-strength ratings of B (fair) and issuer credit ratings of “bb+” for Phoenix’s insurance subsidiaries, including Phoenix Life Insurance and PHL Variable Life Insurance.
In addition, Best affirmed the issuer credit rating and senior debt rating of “b” of The Phoenix. The financial-strength ratings continue to have a stable outlook, and its issuer credit ratings retain a negative outlook.
Best noted Phoenix’s recent success in meeting the Securities and Exchange Commission’s deadlines for most of its past-due filings. Best said it expects Phoenix to take through December to catch up with the rest. Phoenix previously has affirmed that catch-up timetable.
Best also noted that the latest catch-up filings show Phoenix stockholders’ GAAP equity fell sharply to $510.5 million at the end of 2012, despite posting 2012 net income of $205.9 million. However, its stockholder equity rose in 2013, closing at $583.7 million.
“Future positive rating actions could result if A.M. Best becomes comfortable that any and all identified internal control weaknesses in financial reporting or operations have been remediated,’’ Best said in a statement.
“Conversely, if A.M. Best observes uneven or poor trends in earnings, sales, risk-adjusted capital or investment portfolio losses, negative rating actions are probable. A negative rating action may also transpire if materially adverse results are reported.”
