Fidelity & Guaranty Life, the insurer owned by HRG Group Inc., had its outlook switched to developing from stable by Standard & Poor’s after losses tied to bankrupt electronics retailer RadioShack Corp.
“We are taking a more onerous view of FGL’s quality of capital,” S&P said in a statement Friday. Still, “we believe it will strengthen to a level consistent with our ratings by 2017.”
HRG, which is backed by Richard Handler’s Leucadia National Corp., said in April that it is considering a sale of all or part of its stake in FGL. The insurer’s first-quarter profit was wiped out by losses on holdings related to RadioShack, including a loan that was arranged by HRG-owned Salus Capital Partners.
The developing outlook means the ratings firm could lift or lower the Des Moines, Iowa-based company’s grade in the next 12 to 18 months, or keep it the same. The eventual decision will be influenced by the insurer’s ability to build capital, S&P said, and would also take into account any changes that occur if the company finds a buyer.
A representative for FGL had no immediate comment.