Indiana Insurance

The decision Friday by a top Wall Street credit rating agency to reduce the rating of six giants of life insurers is likely to stand as a milestone in the d’affaires, insurance and other leaders experts say.

Until recently, almost all major insurance companies have been regarded as rock solid - their ability to pay claims in question. But the cuts rating by Moody’s Investors Service may accelerate a postponement of the money that insurers strongest and weakest of the weak.

“While we do not see that we are witnessing the consolidation in the banking sector, we will see, the movement of capital in nature and in an indirect way,” said Stephen L. Brown, chairman of the John Hancock Mutual Life Insurance Company. “Companies who buy blocks of strong operations carried out by companies that are not as strong. And the agent forces begin to become familiar with the quality that companies”.

Consumers, of course, should benefit. How the capital aimed at companies stronger, left, the score is generally healthier with a group of life insurers. The risk is that, in order companies strong competitors lower, consumers drive east number of cases of the insurer.

The six companies, whose ratings were cut by John Hancock, travellers, New England Mutual, Massachusetts Mutual, Mutual of New York and mutual understanding principal, who was formerly known as Bankers Life.

The reallocation of funds between insurers ago began over a year if problems “Junk Bond investments of Executive Life Insurance Company, a major life insurers, which are not last spring, was well known.

Well, because Moody’s said, indeed, that all life insurers are not equal, are likely insurance to more discrimination, preventing insurers, whose problems could become familiar with the payment of claims.

Accordingly, insurance executives and outside experts say. the weakest companies may be under even more financial pressure.

“A flight to quality has already been committed, Moody’s and action is it just yet,” said Stephen J. Carlotti, Chief Executive of mutual benefit Life Insurance Company of Newark, was the assumption by the State of New Jersey last Tuesday after so many customers in their political commitments, the ability to pay of the company been questionable.

Mr. Carlotti added that “the top companies to quickly assess the situation and mutual benefit can give the impression with customers and for companies downgraded the worst is yet to come.”

A number of experts noted that the mutual benefits of the decision last week to seek the protection of state could be followed by a minimum reduction of its assessment by the agency Standard & Poor’s Corporation. Effects difficult to predict

It is difficult to predict accurately the effects of Moody’s downgrading. It is reported that the six-party insurers, the ability to pay debts of more than five are classified as “good” or “excellent”, it is possible that many policyholders is the change in the rating of too little consequence. Only evaluation of the Mutual of New York has been reduced to “reasonable”.

“Relatively few of each insured decreases its policies, if they satisified with the results of his report so far,” predicted Peter Hutchings, Chief Financial Officer of Guardian Life Insurance Company, a large New York-based life insurers. “It is indeed a big decision to change insurance.”

But Pension Trustees, invest tens of millions of dollars a year in pension funds, it can not be reluctant to change. These agents usually purchase pensions and other contracts character placement insurers as stable. Even if all businesses except demoted mutual New York still evaluating “good” or “excellent” by Moody’s, it is possible to suffer from disposal of certain means of payment as nervous Pension Trustees redirect investment to insurers that evaluation Triple-A, the highest evaluation.

“The pension trustees are extremely sensitive, which requires you to see, a few pension funds moving,” said Joseph Belth, an insurance professor at Indiana University.