Ratings Updates

Entries for July 2010

Hope you are able to stay cool in this stifling heat!  
 

Not much going on in the ratings area this past month.  Aegon (Transamerica) was downgraded by Fitch to AA- from AA.  We list Cincinnati below because they are a well know casualty insurer in this area.

Here are two items you may find of interest in the world of life insurance:

·        The Dodd-Frank Wall Street Reform and Consumer Protection Act will take some time to digest.  Apparently the law requires federal agencies to develop 520 rules, conduct 81 studies and issue 93 reports.  One of the studies is for the Securities and Exchange Commission to study the standard of care that sellers of securities (including variable life and variable annuities) should follow and then develop a standard-of-care regulation.  Much discussion is expected about using a fiduciary standard rather than the current suitability standard.  It is hard for me to grasp how a product salesman can be held to a fiduciary standard.  That would be tantamount to asking a car salesman to inform potential customers of what competitors are selling cars for down the street.  Well understood and enforced suitability requirements are reasonable but a fiduciary standard could radically change how securities and insurance products are sold.  Of course, some sales people claim to make recommendations only "in the best interest of the customer" but they are still limited to the products they have available through their broker-dealer.
 

·         Andrew Cuomo, New York Attorney General, is looking into retained asset accounts used by life insurance companies to determine if they are unfair to beneficiaries.  The complaint arises from companies paying low interest rates on funds left with the company after the death of an insured and the adequacy of disclosure of the lack of FDIC protection on those funds.  Retained Asset accounts usually give the beneficiary the freedom to get to the money immediately.  If you have clients who are affected and are unsure of their options, we would be glad to help.



Ratings updates for July 2010

 

  

Insurer

AM Best

S&P

Moody's

Cincinnati Life

-

A+ to A

-