AM Best Affirms Credit Ratings of Protective Life Corporation and Its Key Life Subsidiaries
May 18, 2021 by AM Best
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 ICR) of “aa-” (Superior) of the primary life insurance subsidiaries of Protective Life Corporation (headquartered in Birmingham, AL), collectively known as Protective Life. Additionally, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) and the existing Long-Term Issue Credit Ratings (Long-Term IR) of Protective Life Corporation. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of these subsidiaries and ratings.)
The ratings reflect Protective Life’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.
The ratings of Protective Life continue to reflect its very strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), strong asset-liability management, favorable liquidity and demonstrated financial support from its parent, Dai-ichi Life Holdings, Inc, all of which contribute to the strongest balance sheet assessment. While Protective Life’s balance sheet has equity and interest rate risk embedded in its variable annuity book, the group benefits from a comprehensive hedging program, although its capital is somewhat qualitatively diminished by utilization of captive solutions to support XXX and AXXX reserves on a statutory basis. Protective Life maintains moderate investment risk, with a high level of real estate investments. Additionally, there has been some shifting of holdings to private placement securities and a migration to NAIC 2 bonds, in line with industry trends. Investment risk is offset partially by strong financial flexibility and below-average alternative investments. Financial and operating leverage at Protective Life Corporation remain at moderate levels and within AM Best’s expectations.
Operating results are favorable and Protective Life continues to demonstrate a well-established core competency as an acquirer of life and annuity blocks of business, which have contributed to earnings growth and allowed it to realize scale-related operating efficiencies. Operating results increasingly are benefiting from significant block acquisitions.
Protective Life’s business profile benefits from diversity in its distribution channels and product lines, along with continued investment in innovation. Its ERM is appropriate for its risk profile, which benefits from embedded stress testing of key economic scenarios.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with a stable outlook for the following primary life insurance subsidiaries of Protective Life Corporation:
- Protective Life Insurance Company
- Protective Life and Annuity Insurance Company
- West Coast Life Insurance Company
- MONY Life Insurance Company
The following Long-Term IRs have been affirmed with a stable outlook:
Protective Life Corporation—
— “a-” (Excellent) on $400 million 3.4% senior unsecured notes, due 2030
— “a-” (Excellent) on $300 million 8.45% senior unsecured notes, due 2039
Protective Life Global Funding— “aa-” (Superior) program rating
— “aa-” (Superior) on all outstanding notes issued under the program
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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