Standard & Poor’s Ratings Serviceslowered to ‘AA+’ from ‘AAA’ itslong-term counterparty credit and financial strength ratings on the member companies of five U.S. insurance groups: Knights of Columbus, New York Life, Northwestern Mutual, Teachers Insurance & Annuity Assoc. of America (TIAA), and United Services Automobile Assoc. (USAA). The outlooks on the ratings on all of these companies are negative. Standard & Poor’s also lowered the ratings on approximately $17 billion of securities issued by New York Life, Northwestern

Mutual, TIAA, USAA, and their affiliates. (For the full rating list, see this article pub- lished Aug. 8, 2011, on RatingsDirect, on the Global Credit Portal.) At the same time, Standard & Poor’s affirmed the ‘AA+’ ratings on the mem- bers of five other insurance groups— Assured Guaranty, Berkshire Hathaway, Guardian, Massachusetts Mutual, and Western & Southern—and revised the outlooks on ratings on these companies to negative from stable.

The rating actions on these 10 insurance groups follow the lowering of the long- term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’

(see “United States of America Long-Term Rating Lowered To ‘AA+’ On Political Risks And Rising Debt Burden; Outlook Negative,” published on Aug. 5, 2011). We factor direct and indirect sovereign risks—such as the impacts of macroeco- nomic volatility, currency devaluation, asset impairments, and investment port- folio deterioration—into our financial strength ratings. Per our criteria, the sover- eign local-currency credit rating constrains our financial strength ratings on insurers (see “Counterparty Credit Ratings And The Credit Framework,” published on April 14, 2004). The 10 affected insurance groups operate in the U.S. and generally have significant holdings of U.S. Treasury and agency securities. For the insurers with the most exposure, these investments

31 www.creditweek.com

Rating Actions Were Taken On 10 U.S.-Based Insurance Groups

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