San Antonio’s USAA and other large insurers may lose their top credit ratings as officials debate raising the federal debt ceiling, Standard & Poor’s said.
Besides USAA, New York Life Insurance Co., Northwestern Mutual Life Insurance Co., Teachers Insurance & Annuity Association of America and Knights of Columbus may lose their AAA credit ratings, S&P said Friday in a statement.
The insurers have “significant holdings” of U.S. Treasury and agency securities, according to the statement.
“S&P’s action is solely related to the condition of the U.S. government,” USAA spokesman Paul Berry said in an email. “This has no impact on USAA’s business model, financial performance or ability to make good on its commitment to members.”
S&P said in its statement that the insurers are “constrained by the U.S. sovereign credit rating because their businesses and assets are highly concentrated in the U.S.”
“This means USAA’s ratings cannot be higher than the U.S. rating,” Berry said.
On Thursday, S&P said the U.S. government’s long-term rating may be lowered by one or more levels into the AA category if the ratings firm concludes Congress and President Barack Obama haven’t slowed the rise of government debt and aren’t likely to do so soon.
Berry noted USAA is the only property and casualty insurance group to retain the highest possible ratings for financial strength from ratings agencies S&P, Moody’s and A.M. Best. USAA has more than 8 million members, comprised of active-duty service members, veterans and their families.
USAA had a net worth (assets minus liabilities) of $18.7 billion at the end of last year, according to a report to its members.
New York Life spokesman William Werfelman said in an email that the insurer’s portfolio of cash and investments “fully justifies our continued triple-A ratings.” New York Life is the biggest U.S. life insurer owned by policyholders.
Jean Towell of Northwestern Mutual said in an email that the insurer’s surplus position remains strong.
“Despite the difficult economic conditions of the last five years, the Knights of Columbus has maintained its strength,” Patrick Korten, a spokesman, said in an emailed statement. “We foresee similar success going forward.”
Calls to Teachers Insurance & Annuity Association of America weren’t immediately returned.
Express-News Business Writer Patrick Danner contributed to this report.
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