OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of Guggenheim Life and Annuity Company (GLAC) (Wilmington, DE). The outlook of these Credit Ratings (rating) is stable.
The affirmation of the ratings reflects GLAC’s adequate levels of risk-adjusted capitalization relative to its insurance, investment and business risks. A.M. Best notes that overall credit quality of invested assets is expected to improve as the company shifts its allocations to less risky and more liquid asset types. Operating performance reflects above-average investment yields relative to benchmarks and enterprise risk management practices that generally are aligned with its risk profile. GLAC’s business profile is highly concentrated in interest-sensitive business lines; however, its distribution profile is somewhat diversified through assumed reinsurance, retail and private placement business. More recently, its business profile is shifting toward being an originator of fixed and fixed indexed annuities.
Partially offsetting rating factors include holdings in structured securities, collateral loan obligations and BA assets, which have contributed to a strong portfolio yield but contain some concentration risk and lower portfolio liquidity, albeit reduced from prior levels. In addition, while GLAC has experienced favorable earnings in recent years, asset growth has outpaced capital growth over the last four years. Finally, GLAC’s business profile remains highly concentrated in interest-sensitive liabilities with historically high utilization of reinsurance, and it operates in the highly competitive fixed index annuity marketplace.
An inability to retain earnings at a level sufficient to support growth in risk-adjusted capitalization may result in a negative rating action. A significant decline in risk-adjusted capitalization due to operating losses, dividends or large credit impairments may result in a negative rating action. Higher allocations of relatively less liquid and potentially more risky asset types including an increase in level III assets may result in a negative rating action.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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