Fitch believes the Hartford acquisition makes sense from a strategic point of view. It is expected to bolster the U.S. individual life segment through growth in recurring premium and by providing a stable source of earnings and cash flows...
CHICAGO--(BUSINESS WIRE)-- Fitch Ratings does not expect Prudential Financial Inc.'s (PFI) planned acquisition of Hartford Financial's individual life business to have an impact on existing ratings. The Outlook for the ratings of PFI and subsidiaries is Stable. See full list of ratings below.
PFI will acquire about $7 billion of general account assets and reserves, mostly universal life and variable life, through reinsurance transactions, plus $5 billion of separate account assets and reserves. The company will pay Hartford a ceding commission of about $615 million. The transaction will be funded through existing cash at the holding company. Fitch expects no material impact on financial leverage or insurance company capitalization as a result of the transaction, which is due to close in early 2013.
Fitch believes the Hartford acquisition makes sense from a strategic point of view. It is expected to bolster the U.S. individual life segment through growth in recurring premium and by providing a stable source of earnings and cash flows. It is also expected to provide a modest improvement in PFI's overall business profile.
Fitch last reviewed and affirmed PFI's ratings on April 19, 2012 and expects to complete an additional full review by the end of the year. The previous affirmation of PFI's ratings reflects Fitch's view that the company's financial performance and balance sheet fundamentals remain consistent with rating expectations.
Fitch currently has the following ratings on PFI:
Prudential Financial, Inc.
--Long-term IDR 'A-';
--Senior notes 'BBB+';
--Junior subordinated notes 'BBB-'.
--Short-term IDR 'F2';
Prudential Insurance Company of America
--Long-term IDR 'A';
--Surplus notes 'A-';
--Short-term IDR 'F1'.
Prudential Funding, LLC
--CP at 'F1';
--Senior unsecured 'A'.
PRICOA Global Funding I
--Secured notes program 'A+'.
PRUCO Life Insurance Company
Prudential Annuities Life Assurance Corp.
Prudential Retirement Insurance & Annuity Company
PRUCO Life Insurance Company of New Jersey
--Insurer Financial Strength 'A+'.
Prudential Bank & Trust, FSB
--Long-term IDR A-
--Long-term deposit A;
--Short-Term deposit 'F1'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (Sept. 2012;
--Global Financial Institutions Rating Criteria' (Aug. 15, 2012).
Insurance Rating Methodology
Global Financial Institutions Rating Criteria
Cynthia J. Crosson
One State Street Plaza
New York, New York 10004
Douglas L. Meyer, CFA
Brian Bertsch, +1-212-908-0549
Source: Fitch Ratings