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Fitch Places Assurant's Ratings On Rating Watch Negative
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| Copyright: | Business Wire | | Source: | Business Wire | | Wordcount: | 607 |
NEW YORK--(BUSINESS WIRE)--July 17, 2007--Fitch Ratings has placed the following ratings of Assurant, Inc. (Assurant) (NYSE:AIZ) on Rating Watch Negative:
--Issuer Default Rating (IDR) 'BBB+';
--Senior debt 'BBB';
--Short-term Issuer Default Rating (IDR) 'F2'.
Fitch has also placed on Watch the Insurer Financial Strength (IFS) rating of 'A' of Assurant's insurance operating subsidiaries. A complete list of ratings can be found below.
The rating action follows disclosure by Assurant that its president and chief executive officer, Robert B. Pollock, executive vice president and chief financial officer, Philip Bruce Camacho, and executive vice president and chief financial officer of Assurant Solutions / Assurant Specialty Property, Adam Lamnin, each received a 'Wells Notice' from the U.S. Securities and Exchange Commission (SEC) in connection with its ongoing investigation of certain loss mitigation insurance products. This announcement follows the July 5, 2007 disclosure that two employees of Assurant Solutions / Assurant Specialty Property, Michael Steinman and Dan Folse, also received Wells notices. Assurant's Board of Directors has placed all five employees on administrative leave pending further review of the investigation.
Although the 'Wells Notices' are not public, Assurant believes that they are related to the SEC's investigation of a certain loss-mitigating reinsurance contract that was terminated in 2004. A number of insurers, including Assurant, received subpoenas from the SEC to provide documents relating to an industry-wide investigation of these loss-mitigating products. The Wells Notice indicates that SEC staff is considering recommending a civil enforcement action against the employees alleging violations against various federal securities laws.
The Rating Watch Negative reflects Fitch's belief that there is a material possibility that the potential change in the company's leadership may disrupt Assurant's near and long-term strategic goals, and distract employees' attention. Furthermore, Fitch believes there is sufficient uncertainty surrounding the potential negative impact the SEC's investigations could have on the company's franchise and reputation. In addition, it is unclear if further Wells Notices will be issued to other members of management, or if charges will be made against the company itself, resulting in fines or penalties.
Fitch will resolve the Rating Watch Negative pending further clarity on the Wells Notice and the broader investigations of this expired, loss-mitigating reinsurance contract, as well as the impact on the company's management team. A downgrade could occur if either adverse changes occur within the management structure in Fitch's view, or the company incurs material fines or penalties. If, however, the resolution of the SEC investigation does not result in material fines or penalties, and the company continues to perform well with little disruption to its franchise, Fitch will remove the Rating Watch Negative with no related rating action.
Fitch places the following on Rating Watch Negative:
Assurant, Inc.
--Long-term Issuer Default Rating (IDR) 'BBB+';
--$500 million 5.625% senior notes due 2014 'BBB';
--$475 million 6.75% senior notes due 2034 'BBB';
--Short-term Issuer Default Rating (IDR) 'F2';
--Commercial paper 'F2'.
Union Security Insurance Co.
Time Insurance Co.
John Alden Life Insurance Co.
American Memorial Life Insurance Co.
American Bankers Life Assurance Co. of Florida
American Bankers Insurance Co. of Florida
American Security Insurance Co.
--Insurer financial strength (IFS) 'A'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
CONTACT: Fitch Ratings Lauren Kalinowski, +1-212-908-0524 (New York) Peter Patrino, +1-312-368-3266 (Chicago) Kenneth Reed, +1 212-908-0540 (Media Relations, New York)
This is a news service of Thomson Business Intelligence Service ©2006. This content is for your personal use only, subject to Terms and Conditions. No redistribution allowed.
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