OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa-” of The Penn Mutual Life Insurance Company (Penn Mutual Life) (Horsham, PA) and its wholly owned subsidiaries, The Penn Insurance and Annuity Company (Wilmington, DE), Vantis Life Insurance Company (Windsor, CT) and The Penn Insurance and Annuity Company of New York (Brewster, NY). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “a” on the $200 million, 6.65% surplus notes, due 2034, and the $200 million, 7.625% surplus notes, due 2040, issued by Penn Mutual Life. The outlook of these Credit Ratings (ratings) is stable. These companies collectively are referred to as Penn Mutual.
The ratings reflect Penn Mutual’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
Penn Mutual’s risk-adjusted capitalization is considered to be at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supported by the company’s consistent growth in capital over the past few years and its efficiently managed investment portfolio, which has continued to produce favorable net yields relative to peers and industry benchmarks. The balance sheet is supported further by good liquidity metrics and the overall financial flexibility of the organization. The group’s leverage and coverage metrics are still considered to be adequate to support its current operations.
Penn Mutual continuously has reported favorable growth in core life products, though more recently with an offset of modestly decreased annuity sales due to the pandemics. The company benefits from diversity of product offerings, distribution capabilities and partnerships, which has resulted in increased market share. AM Best notes that Penn Mutual has benefited positively from its application and underwriting tool, ACE, which allows advisers access to real-time data, particularly in the current challenging environment. Overall, GAAP operating performance declined a bit in 2020 compared with the prior year due to pandemic-driven volatility in the capital markets. However, this was offset by strong sales across many business lines and additional investment income. In addition, AM Best notes that statutory operating metrics continue to be strained somewhat, related to sales of certain products.
Penn Mutual’s focus on risk management reflects its formalized framework, including well-communicated risk appetite and tolerances, multi-combined scenario stress testing and a risk culture that is embedded across all levels of the organization.
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