S&P Downgrades Five AAA-rated Insurers Heavily Invested In U.S. Debt

By Matthew Sturdevant

  on August 8, 2011 10:34 AM | Permalink | Comments (1) 

This article first appeared at: http://blogs.courant.com/connecticut_insurance/2011/08/five-aaarated-insurers-might-f.html

Five top-rated insurance companies that stack their investments heavily in U.S. debt were downgraded Monday by Standard & Poor's.

The insurers' reduced rating was tied to a downgrade of U.S. government debt on Friday, but it won't have a significant effect on the industry, according to a top insurance regulator.

Standard & Poor's put all AAA-rated insurers on credit watch in a July 15 notice, at the same time government debt was put on watch.

The companies include New Haven-based Knights of Columbus, New York Life Insurance Co., Northwestern Mutual Life Insurance Co., Teachers Insurance & Annuity Association of America (TIAA) and the United Services Automobile Association (USAA).

Knights of Columbus specializes in providing life insurance, annuities, long-term care coverage and disability insurance to Catholic families. Knights of Columbus has $80 billion in in-force life insurance, which is the face value of all existing policies.

"We're still one of the top rated insurers in the United States . . . we still have the absolute top rating from A.M. Best, and we have the top rating available in this environment to an insurer from S&P," said Knights of Columbus spokesman Andrew T. Walther.

"The rating is a rating if we were to issue debt," Walther said. "We don't issue debt. We don't intend to issue debt. We don't have any bonds out there."