Moody's downgrades Protective Life

Moody's Investors Service said it downgraded Protective Life Corp.'s senior debt rating to Baa2 from Baa1 and capital securities to Ba1 from Baa3; the senior secured debt of Protective Life Secured Trusts and Protective Life U.S. Funding Trusts to A2 from A1; and the trust preferred stock of PLC Capital Trusts III-V to Baa3 from Baa2.

The outlook was changed to negative from stable.

The rating actions follow Protective's fourth-quarter earnings announcement, which included investment losses of $61 million and a net loss of $16 million for the quarter.

Moody's said the downgrade and negative outlook are based on concerns about the potential for further investment losses, diminished profitability and liquidity and asset-liability management issues driven by the company's large unrealized loss position.

Somewhat offsetting these negatives, the agency said that Protective has diverse revenue and earnings sources from its domestic life insurance business, multiple distribution channels and an established core competency in acquiring other companies and blocks of business.

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