S&P cuts Phoenix to junk

Standard & Poor's said it lowered its counterparty credit rating on Phoenix Cos. Inc. to BB+ from BBB-. The counterparty credit ratings on Phoenix's operating subsidiaries - Phoenix Life Insurance Co., PHL Variable Insurance Co. and AGL Life Assurance Co. - were lowered to BBB+ from A-.

The outlook is negative.

The agency said it lowered the ratings to reflect the weaker statutory operating performance at the lead insurance company, Phoenix Life; reduced financial flexibility; and reduced capital at Phoenix Life.

The negative outlook focuses on the need to improve statutory earnings to levels commensurate with recent years and the need to remediate the capital deficiency, S&P said. If the company is unable to improve the quarterly trend in profitability and resolve the capital deficiency, the agency could lower the ratings.

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