Third debt-rating agency downgrades Phoenix

The life insurance subsidiaries of The Phoenix Companies Inc. received a ratings downgrade today from Fitch Ratings -- the third downgrade in as many months for the Hartford insurer.

The insurer financial strength rating slipped into non-investment grade territory, lowered to BB+ from BBB.

The rating outlook remains "negative."

In August, Standard & Poor's Corp. cut credit ratings for Phoenix and several of its subsidiaries a day after the company reported a $111 million loss for the second quarter on declining sales.

In September, Phoenix CEO James Wehr lashed out at Moody's Investors Service after it downgraded Phoenix's debt ratings to junk-bond status.

Earlier today, Phoenix announced its board had shrunk to 11 from 15, with the resignations of four veteran directors.

Last week, the company disclosed a $26.6 million third-quarter loss.

Fitch analysts said the ratings reflect ongoing concerns about the company's strategic direction and the impact on its long-term credit profile.

The analysts believe Phoenix has limited flexibility to improve capital and it has experienced negative credit trends, which could put further pressure on capital.

The negative outlook is primarily based on concern over the company's weak operating earnings, very limited financial flexibility, and an expectation of further deterioration in its capital position over the near-term driven by credit losses.

Fitch analysts said policyholder dividends are one of the company's most powerful capital management tools. While most companies with significant participating policies lowered their 2010 dividend scale to reflect the difficult economic environment, Phoenix has promised to maintain its dividend scale.

The amount expected to be paid in 2010 is $300 million.

Shares of Phoenix Companies fell 8 cents, or 2.5 percent, to $3.19 just before the close of trading. (AP)