Life Insurance Companies Receive Downgrade
Congress has been debating how to handle the national debt for years now and the ineffective measures are affecting many industries including life insurance. Five life insurance companies have received a downgrade from Standard & Poor, a United States based financial services company and one of the major credit rating agencies. This is very frustrating for the insurers, but hopefully it won't affect their bottom line too much.
The article "Five Life Insurance Companies Lose Their AAA Status" by Daniel Trindle on AnnuityNewsJournal lists the downgraded insurers as Northwestern Mutual Life Insurance Company, New York Life Insurance Company, USAA Life Insurance, Knights of Columbus, and Teachers Insurance and Annuity Association of America. Not only was their credit rating dropped from AAA to AA+, but Standard & Poor also assigned all of the companies a negative outlook which could earn them another downgrade sooner than later.
This downgrade is partly a result of the the US and their lowered outlook for the national debt. These insurers primarily hold assets in the US with government bonds as investments and sell more during economic expansion. With the US's struggling financial situation S&P had to lower the rating for these particular insurance companies. The downgrade is not directly related to new company initiatives, financial fundamentals or any loss in strength of the insurers. Even though S&P lowered the rating for these insurers, Northwestern Mutual, New York Life, and others retain their top notch credit from other rating agencies including Moody's Investor Service, Fitch Ratings, and AM Best. The quality of these term and whole life insurance policies from the listed insurers continue to be a solid product for consumers.