MOODY'S CHANGES OUTLOOK ON MONY GROUP (Baa2 SENIOR) AND SUBSIDIARIES TO NEGATIVE FROM STABLE
Moody's Investors Service has changed the rating outlook on The MONY Group, Inc. (MONY Group) and on its two principal operating insurance companies, MONY Life Insurance Company (MONY Life) and MONY Life Insurance Company of America (MLOA). MONY Group's senior unsecured debt is currently rated Baa2 and its $150 million commercial paper program is rated Prime-2 (P-2). The insurance financial strength ratings on MONY Life and MLOA are A2. The rating agency says that these actions are part of its industry wide assessment of its current US life insurers' ratings given the increasingly harsh environment in which the industry is operating (discussed in a separate press release).
In changing MONY's rating outlook to negative from stable, Moody's cited the heavy equity market-orientation of the company's business mix, and its diminished profitability in the last eighteen months. The rating agency said that MONY's capital has also declined during this period, and that the decrease in capitalization reflects an increase in realized credit losses in the company's general account, as well as lower returns from its separate account business. The negative outlook indicates that if these trends continue or worsen, Moody's believes the ratings may have to be adjusted downward as it currently does not incorporate the diminished levels of earnings and capital formation that are likely under an adverse scenario.
MONY Group has another subsidiary, MONY Holdings, LLC, that has $300 million of senior secured notes outstanding. Moody's said that the rating outlook on this wrapped Aaa rated debt remains stable. The rating agency said that the source of repayment on these notes is the closed block business at MONY Life. Moody's added that the Aaa rating on these notes is based primarily upon a financial guaranty insurance policy provided by Ambac Assurance Corporation, which is rated Aaa for insurance financial strength.
MONY Group is a financial services holding company based in New York. As of June 30, 2002, the company reported consolidated assets of approximately $24.5 billion and shareholders' equity of about $2.1 billion.
Moody's insurance financial strength ratings are opinions of the ability of insurance companies to repay punctually senior policyholder claims and obligations. For more information, visit our website at www.moodys.com/insurance.
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