Moody’s Adjusts Prudential's Outlook to Negative
November 30, 2008
Moody’s Investors Service lowered its outlook on Prudential Financial to negative, pointing to pressure on the company’s profitability and capital adequacy related in part to its sizable variable annuity business.
On a positive note, Moody’s affirmed Prudential’s senior debt and long-term issuer ratings at A3 and the insurance-financial strength rating of its Prudential American insurance unit at Aa3.
Moody’s said it may downgrade Prudential’s strength ratings if the company doesn’t maintain adequate capital, if material investment losses are sustained or deemed likely, or if organic capital generation is diminished due to lower profits. The outlook could move to stable if investment losses diminish after the third quarter and the firm sustains healthy capital levels.
The rating agency also cited Prudential’s diminished financial flexibility and liquidity as it faces the task of refinancing its debt next year. The holding company has roughly $5.5 billion of debt due in the next 12 months.
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