S&P cuts rating on Phoenix and its subsidiaries following hefty 2Q loss

Standard & Poor's Rating Services today downgraded The Phoenix Cos. Inc., a day after the insurer reported a huge second-quarter loss.
AUG 06, 2009
Standard & Poor’s Rating Services today downgraded The Phoenix Cos. Inc., a day after the insurer reported a huge second-quarter loss. New York-based S&P cut its counterparty credit rating on Hartford, Conn.-based Phoenix to B-, from B+. S&P also cut its ratings on Phoenix operating subsidiaries Phoenix Life Insurance Co., PHL Variable Insurance Co., both of Hartford, and AGL Life Assurance Co. in Plymouth Meeting, Pa., to BB, from BBB-. All the entities also have a negative outlook from the ratings agency. The downgrade arrives on the heels of Phoenix’s second-quarter earnings report, issued yesterday, in which it recorded a loss of $111.2 million, or 96 cents a share, compared with a profit of $6.2 million, or 5 cents a share, a year earlier. Statutory surplus and asset valuation reserve fell to $619.5 million at the end of June, down 13% from March 31. Rising reserves for discontinued group accident and health business, as well as larger-than-expected death claims for universal-life products and credit losses, ate away at the insurer’s surplus levels, according to a research note from S&P credit analyst Adrian Pask. He also wrote that S&P thinks that Phoenix’s capital deficiency is greater than two years’ worth of operating company earnings. Nevertheless, the company’s old block of insurance business policies has consistent profitability, and the insurer’s ratings reflect a strong investment portfolio and operating company liquidity, Mr. Pask wrote. Still, more ratings cuts could be in the offing if the insurer is unable to manage the competing difficulties of rebuilding its statutory capital levels and providing its holding company with cash. “If the company is unable to improve its profitability or resolve the capital deficiency, we could lower the ratings again, most likely by one notch,” Mr. Pask wrote. “We could also lower the ratings by one notch if surrender activity increases.” Michele Farley, Phoenix's spokeswoman, did not immediately return a phone call seeking comment.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.