earlier this month lowered its ratings
on Putnam Investments' parent, Great-West Lifeco, by a notch. Fitch analysts
pointed to the "ongoing underperformance" of Putnam as a key factor behind the action.
Fitch on December 16 downgraded the ratings, including the holding company's
Issuer Default Rating (IDR) to 'A+' from 'AA-' and all outstanding senior debt and hybrid issues, as well as the Insurer Financial Strength (IFS) ratings of all operating subsidiaries to 'AA' from AA+'. The rating outlook is stable.
The ratings cut is "based mainly on ongoing underperformance of Putnam Investments (Putnam), which has strained overall earnings levels and has caused fixed charge coverage to remain at depressed levels for some time," according to the press release issued by Fitch.
"At the time of the Putnam acquisition in 2007, Fitch had anticipated a decline in coverage but expected coverage to return to historical levels by 2009. Given market conditions which continue to impact Putnam's ability to return to profitability, Fitch no longer expects coverage, which was a moderate 6.5 times (x) during the first nine months of 2010, to return to the 9x-10x level in the near to intermediate term," the statement added.
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