A.M. Best Assigns Debt Rating to Guardian Life Insurance Company of America’s New Surplus Notes

OLDWICK, N.J.--()--A.M. Best has assigned a debt rating of “aa-” to the $450 million 4.875% 50-year surplus notes recently issued by Guardian Life Insurance Company of America (Guardian) (New York, NY). The outlook assigned is stable.

A.M. Best expects Guardian to utilize the proceeds from the surplus notes for general corporate purposes. The 4.875% notes, together with the company’s existing $400 million 7.375% surplus notes, account for all of the organization’s financial leverage. A.M. Best believes Guardian’s unadjusted debt-to-capital ratio of roughly 15% is prudent while the group’s pro forma statutory interest coverage ratio remains strong at over eight times.

The ratings of Guardian reflect its long-term financial strength as a mutual company, which is characterized by superior risk-adjusted capitalization ratios, a generally conservative investment portfolio and sound enterprise risk management (ERM) capabilities. Guardian’s core business segments—individual life, individual disability and group benefits—continue to generate steady operating earnings and cash flows. ERM practices are well-developed with utilization of economic capital modeling and stress testing. Guardian continues to invest in branding, technological innovation and refinements in its distribution channels. Additionally, the company has made progress in implementing a number of initiatives to exit lower margin businesses, expand its presence in core markets and further refine its overall business profile.

Offsetting rating factors include heightened competition within the employee benefits sector and continued headwinds from the low interest rate environment. Additionally, A.M. Best believes that Guardian needs to continue to grow its 401(k) business segment to reach critical mass and enhance its overall contribution to its operating profile.

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.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best Company
Michael Adams, FLMI, 908-439-2200, ext. 5133
Senior Financial Analyst
michael.adams@ambest.com
or
Andrew Edelsberg, CPA, FLMI, 908-439-2200, ext. 5182
Vice President
andrew.edelsberg@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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Contacts

A.M. Best Company
Michael Adams, FLMI, 908-439-2200, ext. 5133
Senior Financial Analyst
michael.adams@ambest.com
or
Andrew Edelsberg, CPA, FLMI, 908-439-2200, ext. 5182
Vice President
andrew.edelsberg@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com