Hartford insurer The Phoenix Cos. Inc. says it stands behind its decision to “de-stack’’ its insurance operations despite Wall Street’s doubts as to its efficacy.
Phoenix responded immediately Thursday to the announcement from major Wall Street credit-rating agency Standard & Poor’s that it was placing several Phoenix units on “credit watch’’ in response to Phoenix’s de-stacking declaration earlier in the week.
S&P said the long-term counterparty credit rating and the financial strength ratings of Phoenix Life Insurance Co. (PLIC) and PHL Variable Insurance are under review.
Phoenix said previously it expects to de-stack its insurance units by July 31. PLIC is regulated by the New York State Department of Financial Services. It is currently the indirect parent of PHL Variable, American Phoenix Life and Reassurance Co. and Phoenix Life and Annuity Co., which are regulated by the Connecticut Insurance Department.
Under the proposed structure, the three Connecticut-regulated entities will be direct subsidiaries of Phoenix. The de-stacking is subject to approval by both New York and Connecticut regulators.
“The pending de-stacking results from discussions with the company’s regulators related to the reinsurance treaty,’’ Phoenix said.
“The reinsurance treaty provides significant capital enhancements to both PLIC and PHL Variable,’’ the insurer said. “As S&P evaluates the de-stacking, we will provide information necessary for it to assess and rate Phoenix. We continue to believe the reinsurance treaty and de-stacking will create a more streamlined regulatory structure and further strengthen the enterprise.”
