Fitch cuts Allstate debt rating on investment losses
NEW YORK, Oct 27 (Reuters) - Fitch Ratings on Monday cut its ratings on Allstate Corp (ALL.N), citing continuing deterioration in the insurer's investment portfolio.
Allstate on Thursday reported a surprise quarterly loss due to catastrophe losses of $1.8 billion from hurricanes Gustav and Ike and an $8.6 billion decline in its investment portfolio. For details, see [ID:nN23447614]
"Allstate's life operations account for a significant portion of the realized and unrealized investment losses," Fitch said.
Fitch cut Allstate's issuer default rating one notch to "A-plus," the fifth highest investment grade, from "AA-minus." The rating agency also awarded a negative outlook, indicating an additional downgrade may be likely in the next one to two years.
The negative outlook "reflects Fitch's concerns related to Allstate's investment portfolio and the potential for additional impairments," Fitch said.
Allstate's credit default swaps rallied 38 percent on Monday on hopes the government will extend its rescue plan for banks to the insurance sector, to around 217 basis points, or $217,000 per year for five years to insure $10 million in debt, according to Markit Intraday. (Reporting by Karen Brettell; Editing by Diane Craft)
