Prudential Insurance’s Rating Lowered

A.M. Best & Co. lowered its rating Thursday of giant Prudential Insurance Co., citing uncertainty caused by the continuing legal woes of the company’s Wall Street brokerage, Prudential Securities Inc.

Analysts viewed the ratings drop, although small, as a sign that the brokerage’s limited-partnership debacle is having an impact on the parent company. They also warned it could affect Prudential’s competitive position in selling new policies.

Newark, N.J.-based Prudential is the nation’s largest insurance company in terms of assets and number of policies.

Best lowered its rating of the firm’s ability to pay insurance claims to A+, the rating agency’s second-highest mark, from A++, its highest rating. Best said both ratings are considered superior.

It attributed the reduction to Prudential Securities’ legal liabilities as well as the possibility that one of Prudential Insurance’s own real estate funds may have to pay a large settlement to customers. Best also cited Prudential’s “exposure to underperforming real estate investments.”

Prudential disagreed with the downgrade, which it said “does not reflect the company’s strong financial performance.” The company noted that its total capital increased by $869 million to nearly $11 billion in 1993.