Phoenix gets ratings downgrade on heels of grim first quarter

Standard & Poor’s Ratings Services cut The Phoenix Cos. Inc.’s credit rating today to B+, from BB-. The New York-based ratings agency cut the carrier’s grade following Phoenix’s announcement of a first-quarter operating loss of $117.8 million and a $143.9 million — or 17% decline — in statutory surplus and asset valuation reserves, according to a note from S&P credit analyst Adrian Pask. This week, the company reported a first-quarter loss of $74.8 million, or 65 cents a share. A year earlier, Hartford, Conn.-based Phoenix lost $14.4 million, or 13 cents a share. S&P also affirmed the BBB- counterparty credit and financial-strength ratings on Phoenix’s operating subsidiaries, which include Phoenix Life Insurance Co., PHL Variable Insurance Co. and AGL Life Assurance Co. In his report, Mr. Pask pointed out that the insurance subsidiaries’ ratings reflect the profitability of a closed block of business as well as strong operating company liquidity. However, those positives were offset by a weaker competitive position as two of Phoenix’s key distributors suspended sales, leading the way for potential negative net flows this year due to slowing sales and more surrenders for life and annuities. “We are pleased S&P affirmed our financial strength ratings, taking the long view of our capital adequacy and acknowledging our strong investment portfolio and liquidity,” said Phoenix spokesperson Alice S. Ericson.