Standard & Poor’s recently announced that the top insurers in the country may lose their leading credit ratings as a result of the debates that have raised the federal debt ceiling.
Affected insurance companies could include New York Life Insurance and the Texas-based USAA, as well as the Teachers Insurance & Annuity Association of America, Northwestern Mutual Life Insurance Co., and Knights of Columbus. Standard & Poor’s stated that each of these insurers risk losing their AAA credit ratings.
The S&P statement said that the cause is the “significant holdings” that these insurers have in the U.S. Treasury and the securities of the agency.
Spokesperson William Werfelman, from New York Life, released a statement over email that said that the AAA-rated insurers did not take on any new initiatives that have led to the alterations to the credit watch. Instead, he explained that the S&P claims that “no financial institution can carry a higher rating or outlook than its sovereign.”
Equally, Paul Berry, spokesperson for USAA, said that the action of S&P is “solely related to the condition of the U.S. government”
The U. S. sovereign credit rating is – according to the statement released by Standard & Poor’s – limiting the insurers, as their organizations and their assets are greatly focused within the United States.
Should President Obama and Congress be incapable of slowing the increase in the debt of the federal government – which they are unlikely to do in the near future – S&P speculates that the long term rating of the American government could drop down to the AA category by one or more levels.
