OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of Commonwealth Annuity and Life Insurance Company (Brighton, MA), First Allmerica Financial Life Insurance Company (Brighton, MA), Forethought Life Insurance Company (Indianapolis, IN), Accordia Life and Annuity Company (Des Moines, IA), and its affiliates, Global Atlantic Re Limited (Bermuda) and Global Atlantic Assurance Limited (Bermuda). Together, these subsidiaries are referred to collectively as Global Atlantic Group (Global Atlantic). Am Best has also affirmed the Long-Term ICR of bbb+” (Good) of Global Atlantic Financial Group Limited (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Global Atlantic’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). As of Jan. 2, 2024, KKR & Co. Inc. (KKR) completed a transaction to buy the remaining 37% of Global Atlantic in an all-cash deal worth $2.7 billion. KKR now owns 100% of Global Atlantic.
The rating affirmations reflect Global Atlantic’s favorable balance sheet strength metrics. The balance sheet strength metrics are driven by risk-adjusted capitalization that AM Best has assessed at the strong level, as measured by Best’s Capital Adequacy Ratio (BCAR), ample liquidity and strong financial flexibility. The investment portfolio is comprised primarily of fixed income instruments including corporate bonds, mortgage loans, structured securities and government securities. Global Atlantic has experienced double digit growth in the group’s invested assets over the past five years. The main drivers in this growth include an increase in direct business written in the company’s individual markets, as well as large block reinsurance transactions. The block transactions introduce some volatility in net premium growth, but the five-year trend is generally positive. The most significant recent block transaction was a $10 billion deal with Manulife Financial Corporation, which includes whole life, annuities, and long-term care (LTC) policies. The LTC risk was ceded to a highly rated third-party global reinsurer.
The group’s business profile has grown in the annuity and preneed markets. Global Atlantic has also expanded its presence in the reinsurance space both domestically and internationally. The group utilizes several different structures and treaties to provide reinsurance solutions that strengthen the relationships with their clients. Global Atlantic continues to utilize their sidecars, Ivy I and Ivy II, as co-investment vehicles. These sidecars help Global Atlantic in providing solutions to its reinsurance clients and provides co-investors with more investment opportunities.
The group’s ERM program has continued to grow and adapt, meeting the needs of the group and the larger organization. AM Best expects the group to maintain its current balance sheet strength assessment and business profile assessment levels, in support of its growth strategy.
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