17 Insurers See Ratings Updates
Insurance Networking Ratings Corner, November 20, 2012
A.M. Best has upgraded the financial strength rating (FSR) to A (Excellent) from B++ (Good) and issuer credit rating (ICR) to “a” from “bbb+” of Family Heritage Life Insurance Co. of America (Family Heritage). The ratings have been removed from under review with positive implications and assigned a stable outlook.
Family Heritage’s ratings were placed under review, following the announcement that it had signed a definitive agreement to be acquired by Torchmark Corp. (Torchmark). The transaction closed on Nov. 1, 2012.
The rating upgrades reflect the financial strength of the Torchmark organization as well as A.M. Best’s expectations of continued strong stand-alone capitalization and favorable trends in sales and earnings for Family Heritage. As a result of the acquisition, Torchmark gains access to Family Heritage’s 1,200 captive agents and roughly 239,000 policies in force. A.M. Best notes that the acquisition provides Torchmark with the ability to expand its supplemental health business segment with a higher margin, return of premium product feature.
Fitch has affirmed the 'A-' Insurer Financial Strength (IFS) ratings of Genworth Life Insurance Co., Genworth Life and Annuity Insurance Co. and Genworth Life Insurance Co. of New York (collectively, Genworth Life). Fitch has also affirmed the 'A-' long-term ratings on the Genworth Global Funding Trusts. The Rating Outlook is Negative.
The rating action reflects Fitch's view that Genworth Life's statutory capital position remains strong. Also reflected in the rating affirmation is that its holding company liquidity profile has improved, and investment losses have tapered off and remain within the levels previously forecasted by Fitch. Recent earnings also generally have been in line with rating expectations.
Genworth Life's statutory capital position has benefited during the last year from the sale of its Medicare supplement business. Also bolstering its position are favorable taxes and positive statutory income, and the completion of a life block transaction that closed in Q1 2012. Genworth Life plans to complete a second life transaction in Q4 2012, which is expected to generate in excess of $100 million of after-tax capital benefits.
Guardian Life Insurance Co. of America and its subsidiaries
A.M. Best has affirmed the financial strength rating (FSR) of A++ (Superior) and issuer credit ratings (ICR) of “aa+” of Guardian Life Insurance Co. of America (Guardian Life) and its subsidiaries, Guardian Insurance & Annuity Co. Inc. and Berkshire Life Insurance Co. of America (together referred to as Guardian). Concurrently, A.M. Best has affirmed the debt rating of “aa-” on the $400 million, 7.375% surplus note, due Sept. 30, 2039, of Guardian Life.
Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of “a” of Family Service Life Insurance Co., Sentinel American Life Insurance Co. and Park Avenue Life Insurance Co. A.M. Best also has affirmed the FSR of A (Excellent) and ICR of “a+” of First Commonwealth Insurance Co. These companies also are subsidiaries of Guardian Life. The outlook for all ratings is stable.
The ratings of Guardian reflect its superior capitalization and positive premium trends generated from its core individual, group and asset-based business segments, despite continued challenging economic conditions. Guardian's consistent earnings and diversified business mix provide a stable stream of earnings and cash flow. Additionally, Guardian has executed a number of de-risking initiatives to counteract the low-interest-rate environment; it maintains an active credit risk management program and continues to focus on strengthening its distribution channels.
Markel Corp. and its subsidiaries
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a+" of the members of the Markel North America Insurance Group (Markel). Concurrently, A.M. Best has affirmed the FSR of B++ (Good) and ICR of “bbb+” of FirstComp Insurance Co. (FirstComp). Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of “a-” of Deerfield Insurance Co. (Deerfield), as well as the ICR of “bbb+” and all debt ratings of the publicly traded parent, Markel Corp. (MKL). The outlook for all ratings is stable.
The rating affirmations of Markel recognize its well-established market position as one of the leading excess and surplus lines organizations in the United States, its sustained operating profitability and solid risk-adjusted capitalization. Additionally, these ratings acknowledge Markel's excellent operating cash flow, adequate liquidity, and the financial flexibility afforded by MKL.
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