Moody’s acts on NY Life, Northwestern

Moody’s Investors Service said it revised its outlooks for New York Life Insurance Co. and Northwestern Mutual Life Insurance Co. to negative from stable and affirmed their ratings.

The rating actions follow the affirmation of the United States’ Aaa rating and the change in outlook to negative from stable on Friday, the agency said.

“The outlook change for these companies is influenced by Moody's view that the (1) linkages between the credit profiles of these life insurers and the U.S. government are strong, (2) insurers lack sufficient diversification or the resiliency to decouple, or absorb the fallout, from systemic risks that affect the U.S. government's creditworthiness, and aligns their outlook with the negative outlook on the U.S. government's rating, and (3) ability for a company to raise debt and equity, as governed by the scale and sophistication of a country's capital markets, is an important adjunct to the level of group debt and its debt servicing capability.

“Therefore, any weakening in the currency bond rating of the country in which a company operates also places downward pressure on its overall financial flexibility,” the agency said in a press release.

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