OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Commonwealth Annuity and Life Insurance Company (Southborough, MA), its subsidiaries, First Allmerica Financial Life Insurance Company (Southborough, MA), Forethought Life Insurance Company (Indianapolis, IN), Accordia Life and Annuity Company (Des Moines, IA), and its affiliate, Global Atlantic Re Limited (Bermuda), which together operate as the Global Atlantic Group (Global Atlantic). A.M. Best also has revised the outlook to positive from stable and affirmed the Long-Term ICRs of “bbb-” of Global Atlantic Financial Group Limited (Bermuda), the ultimate parent holding company, and its intermediate holding companies, Global Atlantic Financial Life Limited (Bermuda) and Forethought Financial Group, Inc. (Delaware). Additionally, A.M. Best has revised the outlook to positive from stable and affirmed the Long-Term Issue Credit Rating (Long-Term IR) of “bbb-” on the $150 million 8.625% senior unsecured notes, due 2021 of Forethought Financial Group, Inc.
The positive outlooks reflect the continued successful integration of its previously acquired business units into the Global Atlantic brand, continued favorable operating trends and increasing risk-adjusted capitalization. The ratings are supported by Global Atlantic’s diversified product portfolio and leading market positions within its core preneed, fixed annuity, and reinsurance business segments. The company has reported generally favorable statutory and GAAP operating performance through strong premium growth, profitable underwriting, and good spread margins, although large reinsurance transactions create some volatility in statutory earnings and capital. A.M. Best also notes the group’s risk management capabilities and comprehensive analysis of its business and capital risks. The group’s risk-adjusted capitalization is viewed as strong, with demonstrated additional access to capital through its parent holding companies.
Partially offsetting these rating factors is the group’s elevated risk appetite due to its opportunistic business strategy, which increases its exposure to execution and integration risks. Additionally, given the transactional nature of the group’s reinsurance segment, statutory results can be volatile due to the timing and scale of available opportunities. Also, the group has reported high growth in its fixed annuities liabilities in recent years through direct sales and assumption reinsurance, increasing the interest sensitivity of the business profile and risk of spread compression on earnings.
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