OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of American Life & Security Corp. (American Life) (headquartered in Lincoln, NE). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect American Life’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings are based on the execution of the company’s new strategic business plan as a technology-enabled life and annuity carrier. American Life has been repositioned to address a market need for an administrative and operationally focused program carrier. This fee-based model focuses on providing services as a fronting carrier for third-party reinsurers, and future third-party administration and asset management opportunities.
American Life’s risk-adjusted capitalization, as measured by the Best’s Capital Adequacy Ratio (BCAR), is forecast to be at the strongest level over the near term driven by capitalization to fund the business plan of $20.5 million by Vespoint LLC, partially through outside funding in 2018. The balance sheet assessment also takes into account the level of conservative investment strategy and the type of reinsurance agreements in place with carriers. This includes a high use of reinsurance leverage in the business plan. This also includes a new fixed index annuity product that launched in late 2019, along with two new reinsurance agreements in place.
AM Best considers American Life’s overall operating performance to be adequate, as results are tracking to plan. Premium projections suggest very achievable growth targets between the multi-year guaranteed annuities and fixed indexed annuities products in the next several years, with some projected revenue diversification. AM Best views the company’s business profile as limited due to the start-up nature of operations, along with the initial lack of product diversification and risk exposure within the first few years of operation. The company plans to launch additional new products next year by leveraging key technology solutions. The company’s ability to execute upon its ongoing business plan will be a key rating factor going forward and will be monitored.
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