Ratings Updates

Entries for January 2011

The ratings world was largely quiet to start the year - nothing to report except an upgrade for Unum. Here are a few other thoughts of interest:
·         Very interesting - a recent court decision in California restricted Conseco's plans to dramatically increase cost of insurance charges in a block of universal life policies to improve profitability. We have been concerned that companies might turn to mortality charges as a source of profits with interest spreads so compressed and many policies locked at the guaranteed interest rates. Conseco plans to appeal - we will continue to follow the story.
·         The recent tax law is opening some interesting opportunities with the reunification and increase of gift and estate tax exclusion to $5 million. Using life insurance to create future estate values and paying premiums through significant gifts may be worth considering in this two year window.
·         The SEC has formally recommended uniform fiduciary standards for broker-dealers and investment advisors. Final impact is unclear but change appears to be coming. What effect the standards may have on life insurance agents remains to be seen as well.
·         Some industry experts are very concerned about the President's State of the Union message and the push to attack all "tax expenditures." The tax free inside build up and the tax free death benefit should both be on the list. Stay tuned.


Ratings updates for January 2011
A.M. Best
A-   to A