S&P ups Allmerica watch to positive

Standard & Poor's said it revised the CreditWatch status of its BB counterparty credit rating on Allmerica Financial Corp. to positive from negative.

S&P said it also affirmed its BBB+ counterparty credit and financial strength ratings on Allmerica subsidiaries Hanover Insurance Co., Citizens Insurance Co. of America, Hanover Lloyd's Insurance Co. and Massachusetts Bay Insurance Co. and removed them from CreditWatch negative, where they were placed on Sept. 9.

The outlook on these companies is stable.

The CreditWatch status of the ratings on Allmerica was revised to negative from positive on Sept. 9 because of concerns about the potential impact of losses from Hurricane Katrina given the company's significant exposure in Louisiana, the agency said.

Allmerica's placement on CreditWatch positive again reflects the beneficial impact of the sale of its variable annuity and life businesses. This sale will remove the guaranteed minimum death benefit-exposed business that S&P said has been its primary concern and leave the company with a much smaller, more stable block of runoff life liabilities.

S&P said the removal of the subsidiaries ratings from CreditWatch negative reflects its view that the hurricane losses, though substantial, will not have a significant adverse impact on the capitalization of the property and casualty operations.

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