OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of XL Life Ltd. (XL Life) (Hamilton, Bermuda). The outlook for both ratings is stable.
XL Life’s ratings reflect its more than adequate risk-adjusted capitalization position relative to its investment and insurance risks despite the capital reduction made in 2013. In addition, while historical volatility has been recorded in net income due to realized investment losses, recent year-over-year earnings from insurance operations have been profitable.
Partially offsetting these positive rating factors is XL Life’s limited operating profile as a run-off operation within the life reinsurance segment of XL Group plc, (Dublin, Ireland), a business line that is no longer emphasized by the group. A.M. Best also expects that the continued low interest rate environment will provide challenges to managing the company's large inforce annuity book of business.
A.M. Best believes that given its current profile, positive rating movement is unlikely. Negative rating actions could occur if XL Life’s capitalization and/or operating performance falls markedly short of A.M. Best’s expectations.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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