by John Darer
The State of California already has the lowest credit ratings of any state in the United States according to Bloomberg. Now facing a $24 billion budget deficit, the state of California is facing a further drop in its credit rating from Moodys Investor Service according to sources quoted in today's New York Post.
Tax exempt municipal bonds are an alternative to structured settlements that may appeal to high income or high net worth individuals.
Structured settlements that simulate the cash flow from a bond held to maturity however, match up very favorably to municipal bonds because payments from structured settlements are income tax free pursuant to IRC 104(a). In addition structured settlements can be paid more frequently than bond payment schedules
As of June 19, 2009 that life insurance companies issuing qualified structured settlement funding assets from the following sources have superior Moodys credit ratings to the State of California's A2 Moodys rating:
New York Life Insurance Company, New York, NY Aaa
Metropolitan Life Insurance Company New York, NY Aa2
John Hancock Life Insurance Company Aa3
Allstate Life Insurance Company, Northbrook IL A1
American General Life Insurance Company, Houston, TX A1
Hartford Life Insurance Company Hartford, CT A1
Pacific Life and Annuity Newport Beach, CA A1
Note: Municipal Bonds have different liquidity characteristics to structured settlements.
Life Insurers Seen Fit to Survive The Crisis-Moodys, from May 27, 2009 Wall Street Journal Online