S&P’s places U.S. insurers on credit watch in wake of U.S. sovereign debt crisis

Standard & Poor’s has placed its long-term counterparty credit and financial strength ratings and related issue ratings on all ‘AAA’-rated U.S. insurance groups on CreditWatch with negative implications.
The short-term ratings on the insurance companies remain unchanged.
The CreditWatch on the insurers follow S&P’s placement of a CreditWatch on the long-term and short-term sovereign credit ratings on the United States of America with negative implications.
“We view the long-term ratings on the U.S. insurers to be constrained by the U.S. sovereign credit rating because their businesses and assets are highly concentrated in the U.S.,” an S&P’s research update says.
“We factor direct and indirect sovereign risks – such as the impact of macroeconomic volatility, currency devaluation, asset impairment and investment portfolio deterioration – into our financial strength ratings. Per our criteria, the sovereign local currency rating constrains our financial strength ratings on insurers.”
The ‘AAA’-rated insurance groups under credit watch are:
* Knights of Columbus;
* New York Life Insurance Co.;
* Northwestern Mutual Life Insurance Co.; and
* Teachers Insurance & Annuity Association of America.