A.M. Best Affirms Credit Ratings of Symetra Financial Corporation and Its Subsidiaries
December 5, 2017 by Symetra Life Group
OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Symetra Life Insurance Company and its subsidiary, First Symetra National Life Insurance Company of New York (New York, NY), together referred to as Symetra Life Group. Concurrently, A.M. Best has affirmed the Long-Term ICR of “bbb+” and the existing Long-Term Issue Credit Ratings (Long-Term IR) of Symetra Financial Corporation(Symetra). The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Bellevue, WA, unless otherwise specified.
The rating affirmations reflect the Symetra Life Group’s strong risk-adjusted capitalization, as well as the support of its parent, Sumitomo Life Insurance Company (Sumitomo). A.M. Best notes that year-over-year financial comparisons reflect a difference in accounting methods as the merger was accounted for under the acquisition method of accounting (purchase accounting or PGAAP). Thus far, under Sumitomo’s ownership, there has been no material change to business strategy, operations or the level of risk within the current balance sheet structure. Symetra’s financial leverage is roughly 16% as of Sept. 30, 2017, which is favorable relative to industry and peer benchmarks. Additionally, A.M. Best believes that Sumitomo is committed to Symetra’s growth strategy and will provide capital support as needed in the near to medium term. The rating affirmations also reflect the organization’s strengthened business profile through enhanced product and distribution diversification and generally favorable statutory and GAAP operating earnings.
While Symetra Life Group maintains a diverse investment portfolio that is adequately matched to its liability profile, the company has historically had a more significant investment allocation to commercial mortgage loans than similarly rated peers, at over 200% of total statutory surplus as of Sept. 30, 2017. However, the company has a proven track record of favorable performance within this portfolio, which has a generally lower average loan-to-value and loan size. Symetra Life Group has reported favorable net investment income in recent periods, and A.M. Best believes its investments to be well-managed in aggregate.
Symetra Life Group is well-regarded as a leading carrier in the medical stop-loss space. A.M. Best also notes the company has focused efforts on overall product diversification. Operating results remain profitable on a combined basis across all segments, through the first three quarters of 2017, although materially lower than recent years due in part to mortality and morbidity experience and new business strain. Operating results also reflect volatility associated with derivatives utilized to hedge interest rate risk. A.M. Best remains concerned regarding revenue growth and earnings sustainability going forward, given the continued low interest rate environment and evidence of lower net investment yields throughout the industry, as well as the generally competitive landscape in key product lines.
The following Long-Term IRs have been affirmed:
Symetra Financial Corporation—
— “bbb+” on $250 million 4.25% senior unsecured notes, due 2024
— “bbb-” on $150 million fixed-to-floating rate junior subordinated notes, due 2067
The following indicative Long-Term IR shelf ratings have been affirmed:
Symetra Financial Corporation—
— “bbb+” on senior unsecured debt
— “bbb” on subordinated debt
— “bbb-” on junior subordinated debt
— “bbb-” on preferred securities
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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Kate Steffanelli, +1-908-439-2200, ext. 5063
Senior Financial Analyst
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
William Pargeans, +1-908-439-2200, ext. 5359
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations