A.M. Best Co. lowered the issuer credit rating ("ICR") to "bbb"
from "bbb+" of
StanCorp Financial Group Inc.
), besides downgrading the debt ratings. The outlook,
however, was upgraded to stable from negative.
Concurrently, the rating agency reiterated the financial strength
rating ("FSR") of A (Excellent) of Standard Insurance Company and
The Standard Life Insurance Company of New York, the insurance
subsidiaries of StanCorp Financial. At the same time, A.M. Best
lowered ICR to "a" from "a+." The outlook for ICRs was upgraded to
stable from negative, though the outlook for the FSR remains
The downward revision came on the back of higher group insurance
benefit ratios in the past several quarters stemming from continued
increase in claims incidence and higher claims severity in various
blocks of the group's long-term disability (LTD) business.
The insurance subsidiaries have significant exposure to commercial
mortgage loans; and as such there remains a possibility of higher
delinquencies. Nevertheless, the company's 60-day delinquency rates
have been exhibiting a declining trend over the last four quarters.
The ratings affirmations of the insurance subsidiaries reflect
strong operational results, adequate risk-adjusted capitalization
and dominant presence within the employee benefits market. Sales
trend and persistence level have continuously improved.
The asset management segment has generated considerable revenue
and aided diversification and cross-selling opportunities within
the employee benefits market. Furthermore, it offers considerable
dividend to StanCorp Financial to enable it to service debt and
enhance shareholders value.
METLIFE INC (MET): Free Stock Analysis Report
PRINCIPAL FINL (PFG): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
UNUM GROUP (UNM): Free Stock Analysis Report
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Though A.M. Best believes StanCorp Financial's present ratings hold
true in the near to medium term, it might consider rating
downgrades if operating results deteriorates within its core lines,
risk-adjusted capitalization erodes or delinquency and
foreclosure activity within its mortgage loan portfolio increases
Rating affirmations or upgrades from credit rating agencies play an
important part in retaining investor confidence in the stock as
well as maintaining creditworthiness in the market. On the other
hand, rating downgrade adversely affects the business, besides
increasing costs of future debt issuances.
The quantitative Zacks #5 Rank (short-term Strong Sell rating) for
StanCorp Financial indicates downward pressure on the shares over
the near term.
), competing with StanCorp Financial have a Zacks #3 Rank
(short-term Hold rating) indicating no clear directional pressure
on the shares over the near term.
Principal Financial Group Inc.
), has a Zacks #5 Rank (short-term Strong Sell rating) indicating
slight downward pressure on the shares over the near term.