MOODY'S REVIEWS CREDIT RATINGS OF AETNA LIFE AND CASUALTY COMPANY (SENIOR AT A2) FOR UPGRADE; CONFIRMS ITS INSURANCE SUBSIDIARIES' RATINGS
New York, 4/1/1996 -- Moody's Investors Service placed the credit ratings of Aetna Life & Casualty Company (Aetna) under review for possible upgrade following the announcement that Aetna and U.S. Healthcare agreed to merge. The insurance financial strength ratings of Aetna's life subsidiaries were confirmed, as were the insurance financial strength ratings of Aetna's property/casualty subsidiaries which are in the process of being sold to Travelers Group. The merger has been approved by the board of directors of both companies and is subject to regulatory and shareholder approval, the close of the sale of Aetna's property/casualty operations to Travelers Group, and other customary conditions.
Aetna's health care operations have good market position and strong profitability, and the merger with U.S. Healthcare will create the leading provider of managed health care services. The review will focus on the combined company's ability to achieve sales growth and expense savings, consolidate and integrate the two culturally-different companies, and to improve provider relations, quality service, and administrative systems. However, the rating agency added that Aetna and U.S. Healthcare face the challenges of intense price competition and legislative and marketplace reform in the health care sector. Moody's believes Aetna also benefits from its conservative financial management, improving asset quality, its profitable position in the retirement service markets, and its exit from the property/casualty business.
Ratings placed under review for possible upgrade include the following:
Aetna Life and Casualty Company -- senior debt rating of A2, provisional senior debt shelf rating of (P)A2, provisional subordinated debt shelf rating of (P)A3, provisional preferred stock shelf rating of (P)"a2", and counterparty rating of A2. The rating for commercial paper of Prime-1 was confirmed.
Aetna Capital L.L.C. -- monthly income preferred securities rating of "a2" and provisional preferred stock shelf rating of (P)"a2".
Ratings confirmed include the following:
Aetna Life Insurance Company -- insurance financial strength rating of Aa3 and counterparty rating of A1.
Aetna Life Insurance and Annuity Company -- insurance financial strength rating of Aa2 and counterparty rating of Aa3.
Aetna Insurance Company of America -- insurance financial strength rating of Aa2.
Aetna Casualty and Surety Company intercompany property/casualty pool members -- insurance financial strength ratings of A1 for Aetna Casualty and Surety Company, Aetna Casualty and Surety Company of America, Aetna Casualty and Surety Company of Illinois, Aetna Casualty Company of Connecticut, Aetna Commercial Insurance Company, Aetna Insurance Company, Aetna Insurance Company of Illinois, Aetna Personal Security Insurance Company, Automobile Insurance Company of Hartford, Farmington Casualty Company, and Standard Fire Insurance Company.
Aetna Life and Casualty Company, headquartered in Hartford, Connecticut, reported consolidated assets of $84 billion and shareholders' equity of $7.3 billion as of December 31, 1995.
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