CNO Financial Group's CNO ratings have been upgraded by credit rating agencies S&P Global Ratings and Fitch Ratings. Following this rating action, the company is now rated as investment grade by the leading credit rating giants, namely A.M. Best, Moody's, Fitch and S&P.
S&P upgraded CNO Financial's senior unsecured debt rating to 'BBB-' from 'BB+' and financial strength rating of its operating units to 'A-' from 'BBB+' on Jun 21, 2019. The outlook is stable.
Moreover, on Jun 14, 2019, Fitch promoted CNO Financial's senior unsecured debt rating to 'BBB-' from 'BB+' and the financial strength rating of the its operating arms to 'A-' from 'BBB+'. Here too, the outlook is stable.
On Oct 4, 2018, Moody’s Investors Service raised CNO Financial's senior unsecured debt rating to 'Baa3' from 'Ba1' and the financial strength rating of the company's operating subsidiaries to 'A3' from 'Baa1'. The rating outlook is stable.
While on Aug 26, 2015, A.M. Best enhanced ratings of CNO Financial Group to A-.
Rationale Behind the Ratings
The ratings reflect the company’s reduced exposure to legacy long-term care (LTC) liabilities.
Last September, it completed its pending long-term care reinsurance transaction with Wilton Reassurance Company. Under this deal, CNO Financial’s wholly-owned subsidiary, Bankers Life and Casualty Company, has ceded all its legacy (dating back to prior 2003) comprehensive and nursing home long-term care policies including the statutory reserves of around $2.7 billion to Wilton Re through 100% indemnity coinsurance. This deal has significantly lowered the company’s risk profile and is expected to improve the return on equity and cash flows going forward.
The credit rating agencies also considered the company’s operating excellence as well as its solid balance sheet.
Shares of this Zacks Rank #4 (Sell) company have lost 14.1% in a year’s time against its industry’s rise of 6.6%.
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence in the stock as well as maintaining its creditworthiness in the market. We believe, the company’s strong score with the credit rating agencies will help it write more business going forward.
Stocks to Consider
Investors interested in the same space might take a look at some better-ranked stocks like American International Group, Inc. AIG, MetLife, Inc. MET and Kemper Corporation KMPR. You can see the complete list of today’s Zacks #1 Rank stocks here.
American International Group provides insurance products in North America and around the globe. It sports a Zacks Rank #1 (Strong Buy). In the trailing four quarters, the stock pulled off average positive surprise of 15.61%.
MetLife offers insurance, annuities, employee benefits and asset management businesses. It came up with average positive surprise of 9.8% over the last four quarters. The company has a Zacks Rank #2 (Buy).
Kemper is a diversified insurance holding company, offering property and casualty plus life and health insurance services in the United States. This Zacks #2 Ranked player managed to deliver average trailing four-quarter beat of 14.13%.
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