TEXT-S&P: AIG Edison Life upgraded to ‘AA-‘;outlook negative


— The Prudential Financial group announced that three companies under its umbrella—AIG Edison, AIG Star, and Gibraltar—have signed a merger agreement. (Gibraltar will be the surviving entity.)Standard & Poor’s raised the financial strength and long-term counterparty credit ratings on AIG Edison to ‘AA-’ from ‘A’. We upgraded AIG Edison because we revised upward its group status to “core,” based on our group methodology criteria, considering high certainty surrounding the merger and the progress it has made in integrating into the group.— The outlook on the ratings is negative, reflecting the outlooks on the Prudential Financial group’s Japanese core insurance companies, which have been assigned ratings and outlooks that are constrained by the sovereign ratings on Japan (AA-/Negative/A-1+).Standard & Poor’s Ratings Services today raised its financial strength and long-term counterparty ratings on AIG Edison Life Insurance Co. to ‘AA-’ from ‘A’. The outlook on the ratings is negative. The rating action follows the Prudential Financial group’s announcement that AIG Edison, AIG Star Life (NR), and Gibraltar Life (Gibraltar; AA-/Negative/—), signed a merger agreement on Oct. 11, 2011, following the resolutions made at each company’s board-of-director meeting. The three companies currently operate under the group.AIG Edison is due to merge on Jan. 1, 2012, into Gibraltar, which is one of the group’s core insurance companies in Japan. The merger is subject to regulatory approval in Japan. We hold the view that AIG Edison has made smooth progress in integrating into the U.S.-based Prudential Financial group, since it was acquired by the group in February 2011. Considering the high certainty surrounding the merger and the progress that AIG Edison has made in integrating into the group, we revised AIG Edison’s group status to “core” from “strategically important,” based on our group methodology criteria. As a result, we upgraded the company to ‘AA-‘, which is the same rating as those assigned to the Prudential Financial group’s core subsidiaries in Japan. We will withdraw the ratings on AIG Edison when the merger is completed.The outlook on the long-term rating on AIG Edison is negative. This primarily reflects our view that the ratings on the Prudential Financial group’s core subsidiaries in Japan are constrained by the sovereign ratings on Japan. This is because they hold a high percentage of domestic assets in their portfolios and their businesses are concentrated in the domestic market. We may lower the ratings on AIG Edison if we lower the sovereign ratings on Japan or the ratings on the Prudential Financial group’s core subsidiaries. We may also downgrade AIG Edison if the planned merger is canceled, although we consider this to be unlikely. Conversely, if the outlook on Japan is revised to stable, the outlook on the company and the group’s core subsidiaries in Japan may also see upward movement.

FACTBOX-Republicans vying to take on Obama in 2012


MITT ROMNEYFrontrunner Romney, 64, who lost the nomination race to John McCain in 2008, has regained the lead in opinion polls as Texas Governor Rick Perry has stumbled.Romney raised about $18 million in the second quarter of 2011, more than four times as much as any other contender, in that period. Although he has not released his third quarter report, he is expected to have raised $12-15 million.Romney, who co-founded private equity firm Bain Capital, has touted his business experience as a way to attack Obama’s handling of the struggling U.S. economy. Critics say he was a corporate raider who cut jobs.While favored by pro-business Republicans, Romney is viewed skeptically by some conservatives because he was governor of liberal Massachusetts and is a Mormon, a religion some evangelicals do not consider Christian.Republicans have attacked him because of a healthcare plan he helped develop in Massachusetts that became a model for the Obama’s healthcare law. Romney defends the state law and attacks the federal version, which he has promised to repeal.RICK PERRYThe three-term Texas governor, 61, has lagged in recent polls after shooting to the top of the field when he jumped into the nomination race in August.A social and fiscal conservative, Perry has come under heavy fire from Republican rivals for some relatively moderate immigration positions and an order that young girls in Texas be inoculated for a sexually transmitted virus.Although he has never lost an election and is the longest serving governor in Texas history, his stumbling performance in debates has raised questions about whether he would stand a chance of defeating Obama next year.Perry has stressed his economic record in Texas, saying his conservative leadership helped the state create more than a third of all new U.S. jobs in the past two years. His record also includes deep education cuts, low public service levels and high numbers of people without health insurance.Perry has proven himself a formidable fund-raiser, reaching $17 million for the third quarter, despite only entering the race in mid-August.HERMAN CAINA radio talk show host and former chief executive of Godfather’s Pizza, the 65-year-old Cain was chairman of the Federal Reserve Bank of Kansas City’s board of directors. He has never been elected to political office.Boosted by strong debate performances and drawing attention for his “9-9-9” economic plan, Cain has jumped to the top tier of Republican candidates in opinion polls and won support of many fiscally conservative Tea Party voters.Cain’s signature plan would scrap existing U.S. tax codes for a flat nine percent corporate, income and sales tax. Some experts say the sales tax portion of the plan could shift a heavier burden to lower-income earners.Cain has yet to prove he can attract major donors and assemble the campaign team he would need to beat other Republicans in the primary process, and then defeat Obama.RON PAULAn anti-war congressman from Texas who ran unsuccessfully for the party’s 2008 nomination, libertarian Paul, 76, has for years pushed many of the positions that are now part of the Tea Party platform. His calls for steep cuts in the U.S. deficit and the size of government have moved to the mainstream.A forceful debater, Paul has a dedicated following, raising $8 million in the third quarter of 2011. He receives a steady support of 8-10 percent in national opinion polls, but has not broken through to the larger electorate.NEWT GINGRICHThe former speaker of the U.S. House of Representatives, 68, was the main architect of the 1994 Republican congressional election victory and author of its “Contract with America” manifesto. Gingrich ended his 20-year congressional career after Republican losses in 1998 elections.Leading members of Gingrich’s campaign team resigned in June and he has had a poor showing in the polls.MICHELE BACHMANNBachmann, 55, reached the top tier of Republican candidates after a strong performance in the first major debate in June. But she has since fallen to single digits in opinion surveys.The Minnesota congresswoman won the Iowa straw poll in August and is now focusing her campaign in the state, although her support there has dropped to 10 percent or below.Known for strong religious views and uncompromising positions on financial issues, Bachmann is seen as having little appeal to moderate Republicans or independents. She is leader of the Tea Party caucus in the U.S. House.RICK SANTORUMSantorum, 53, a former U.S. senator from Pennsylvania, made a name for himself opposing abortion rights and gay marriage while backing welfare reform. He has fought to enhance his profile in early voting states but remains far behind.JON HUNTSMANHuntsman, 51, annoyed the White House by resigning in April as Obama’s ambassador to China to plan his presidential run.Like Romney, Huntsman is a Mormon. The former governor of Utah and member of a wealthy chemicals family is a moderate, and he has not won over the conservative voters who play a big role in the nominating process.