The downgrading of the U.S. government's credit rating is spilling over to some insurance companies.
In light of the government's reduced credit standing, Standard & Poors announced that it lowered the credit and financial strength ratings of five insurance groups and their companies and lowered the outlook for five other insurance groups.
The rating agency lowered the credit and financial ratings of the following groups to AA+ from AAA:
• Knights of Columbus
• New York Life Group
• Northwestern Mutual Life Insurance Co.
• Teachers Insurance & Annuity Assoc. of America (TIAA)
• United Services Automobile Assoc. (USAA).
Standard & Poors also lowered ratings on about $17 billion of securities issued by New York Life, Northwestern Mutual, TIAA, USAA, and their affiliates.
Meanwhile, the rating agency affirmed its AA+ ratings on the members of five other insurance groups and revised its outlooks on those insurance companies to negative from stable. Those groups are:
• Assured Guaranty
• Berkshire Hathaway Insurance Group
• Massachusetts Mutual Life Insurance Co.
• Western & Southern Financial Group Inc.
"While our assessment of these companies' fundamental credit characteristics hasn't changed, our ratings actions reflect our view that the link between their ratings and the credit quality of the sovereign could lead to a decline in the insurers' financial strength," S&P said in a statement. "We base this on the fact that the companies' businesses and assets are highly concentrated in the U.S. and generally have significant holdings of U.S. Treasury and agency securities."
Standard & Poors said it believed the 10 groups have "very strong financial profiles and favorable business profiles" to support the AA+ ratings.