Moody's: StanCorp to negative

Moody's Investors Service said it affirmed StanCorp Financial Group, Inc.'s (senior unsecured debt at Baa1) credit ratings and changed the outlook to negative from stable.

The rating action follows the announcement of StanCorp's second quarter results, the agency said. The outlook revision reflects the adverse impact on profitability from increased claims driven by a significant uptick in incidence in the company's group long-term disability business.

Two important segments for StanCorp, education and the public sector, have historically performed well but have generated higher claims recently than in previous economic downturns, the agency said. The impact of potential federal and/or state budget cuts could generate additional claims from these industry groups, putting further pressure on profitability and capital formation.

Capital is constrained both from lower earnings and share repurchases, the agency added. As a result, continued share repurchases will put additional pressure on the ratings.

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