NU Online News Service, Aug. 10, 2:49 p.m.EST
|Rating agency A.M. Best Co. says the deal reached in Washingtonto raise increase the U.S. debt ceiling does not get rid ofuncertainty regarding the credit quality of U.S. governmentdebt.
|In a brief released by the company, A.M. Best says it considered adowngrade of the country's credit ratings during recent stresstesting of insurers' financial strength. The agency says itactually pondered a more severe downgrade.
|"The luster of U.S. Treasury securities as a virtually risk-freeinvestment has been tarnished," regardless of the extent of thedowngrade, A.M. Best says.
|Yet the securities remain a part of insurers' portfolios, theagency continues, while "macroeconomic concerns that were part ofA.M. Best's stress scenario loom as large as ever."
|Less than 2 percent of property and casualty rating units mighthave seen ratings impacted as a result of the stress test performedlast month, says A.M. Best.
|P&C companies tell A.M. Best they do not plan to changeinvestment strategies, but will add to capital by getting fundsfrom parent companies and affiliates, raising equity and keepingearnings, A.M. Best says.
|The agency says the rating outlook for the life and annuitysector of the industry is impacted more, especially as economicweakness continues. Last month A.M. Best considered changing itsrating outlook from stable to negative and now the likelihood"remains elevated."
|As much as 25 percent of life insurance rating units could haveseen ratings impacted under the stress scenario.
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