OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long- Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) of National Guardian Life Insurance Company (NGLIC) (Madison, WI). In addition, AM Best has affirmed the Long-Term Issue Credit Rating of bbb+ (Good) on the $47 million, 6.45% surplus notes, due 2035, issued by NGLIC. The outlook of these Credit Ratings (ratings) is stable.
Concurrently, AM Best has downgraded the FSR to B++ (Good) from A (Excellent) and the Long-Term ICR to “bbb“ (Good) from “a” (Excellent) of Commercial Travelers Life Insurance Company (Commercial Travelers) (Albany, NY). These ratings have been placed under review with developing implications.
NGLIC’s ratings reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. NGLIC continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which has been bolstered by the sale of several legacy blocks of business. In addition, NGLIC has improved the quality of its capital over recent years with the pay-down of surplus notes. NGLIC enjoys a market leading position in the preneed life insurance space and continues to look for opportunities to expand sales through alternative channels and new product offerings with a recent focus on dental and vision business. AM Best expects the group to maintain sufficient operating results with lower interest expenses and ongoing earnings contributions from its core lines of business going forward.
The ratings of Commercial Travelers reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.
The rating downgrades and under review with developing implications status of Commercial Travelers reflect that fact that AM Best no longer views the company as strategically important to NGLIC following the pending sale of the entity to a third party with a projected close date in the third quarter of 2022. Due to this pending sale and termination of a reinsurance agreement between NGLIC and Commercial Travelers, the strategic importance of Commercial Travelers to the group has been reduced substantially and soon will be nonexistent. Given the current lack of available information AM Best has on the acquiring third party, including financial standing, operational strategy and other important factors that could positively or negatively affect the ratings of Commercial Travelers post-transaction, the entity has been placed under review with developing implications.
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