A.M. Best Downgrades Credit Ratings of Members of Hartford Life Group; Places Under Review With Developing Implications
December 05 2017 - 5:00PM
Business Wire
A.M. Best has downgraded the Financial Strength Rating to
B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit
Ratings (Long-Term ICR) to “bbb+” from “a-” of Hartford Life
Insurance Company and Hartford Life and Annuity Insurance
Company (collectively referred to as Hartford Life
Group). Additionally, A.M. Best has downgraded the Long-Term
ICR to “bbb-” from “bbb” of Hartford Life, Inc. (HLI)
(Delaware), along with its Long-Term Issue Credit Ratings
(Long-Term IRs). Concurrently, A.M. Best has placed all Credit
Ratings (ratings) for these entities under review with developing
implications. Hartford Life Insurance Company and Hartford Life and
Annuity Insurance Company are domiciled in Hartford, CT. (See below
for a detailed listing of the Long-Term IRs.)
In addition, A.M. Best has commented that the ratings of The
Hartford Financial Services Group, Inc. (The Hartford)
[NYSE:HIG] and all other rated subsidiaries are unchanged by these
rating actions.
The rating actions are in response to The Hartford’s
announcement that it has entered into a definitive agreement to
sell the Hartford Life Group entities that the company refers to as
Talcott Resolution, to a group of investors led by Cornell Capital
LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global
Atlantic Financial Group Limited (Global Atlantic), Pine Brook
and J. Safra Group. Total consideration to The Hartford is $2.05
billion, composed of cash from the investor group, a pre-closing
cash dividend, debt that is included in the sale and a 9.7%
ownership interest in the acquiring company. The close is estimated
to occur in the first half of 2018, subject to regulatory approval.
The Hartford’s Group Benefits and Mutual Funds subsidiaries,
currently under HLI in the organizational structure, will be
transferred to another subsidiary of The Hartford prior to close of
the transaction. Additionally, Talcott Resolution will reinsure a
material portion of its fixed annuity, payout annuity and
structured settlement businesses to a subsidiary of Global
Atlantic.
The rating downgrades reflect the fact that Hartford Life Group
no longer is eligible for rating enhancement under A.M. Best’s
Credit Rating Methodology. Additionally, the developing
implications reflect the need for A.M. Best to assess the new
ownership structure, their strategic plans for Hartford Life Group
and the potential impact on the company’s rating fundamentals. A.M.
Best expects to resolve the under review status of the ratings
following discussions with the new ownership group and completion
of the transaction.
While consolidated capitalization for The Hartford is expected
to decline as a result of the transaction, A.M. Best acknowledges
the benefits of the transaction including eliminating the impact of
Talcott Resolution’s lower return on equity (ROE) and earnings on
the consolidated ROE and earnings for the group, a reduction in
exposure to equity, interest rate and investment risks, and the
reduction in the size and complexity of the consolidated balance
sheet including lower investments, reserves and debt-to-capital
leverage. A.M. Best expects financial leverage and coverage
measures at the holding company to remain within levels supportive
of the current ratings.
Hartford Life, Inc.—
-- to “bbb-” from “bbb” on $250 million 7.65% senior unsecured
debentures, due 2027 (approximately $80 million outstanding)
-- to “bbb-” from “bbb” on $400 million 7.375% senior unsecured
notes, due 2031 (approximately $63 million outstanding)
Hartford Life Institutional Funding— to “bbb+ from “a-”
on program rating
-- to “bbb+” from “a-” on all outstanding notes issued under the
program
Hartford Life Insurance Company (IncomeNotes)—
-- to “bbb” from “bbb+” on all outstanding notes issued under
the program
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20171205006420/en/
A.M. BestKate Steffanelli, +1 908-439-2200, ext.
5063Senior Financial Analyst —
L/Hkate.steffanelli@ambest.comorJonathan Harris, CFA, FRM,
+1 908-439-2200, ext. 5771Senior Financial Analyst —
P/Cjonathan.harris@ambest.comorChristopher Sharkey, +1
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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