OLDWICK, N.J.--()--A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of XL Life Ltd. (XL Life) (Hamilton, Bermuda). The outlook for both ratings is stable.
The ratings of XL Life reflect its more than adequate risk-adjusted capitalization position relative to its investment and insurance risks. The ratings also reflect the company’s business profile within the life reinsurance segment of XL Group plc, a business line that is no longer emphasized.
Partially offsetting these positive rating factors are XL Life’s limited operating profile as a run-off operation and the continued low interest rate environment, which will challenge the company's annuity book of business. Although earnings recently have been volatile due in part to realized investment losses and strategic investment realignment, XL Life recorded positive net income in 2011 and 2012.
A.M. Best believes XL Life is well positioned at its current rating level. Negative rating actions could occur if XL Life’s capitalization or operating performance falls markedly short of A.M. Best’s expectations.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology
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