OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A++ (Superior) and the issuer credit ratings of “aa+” of Thrivent Financial for Lutherans (Appleton, WI) and its subsidiary, Thrivent Life Insurance Company (Minneapolis, MN) (together known as Thrivent Financial). The outlook for all ratings is stable.
Thrivent Financial’s ratings reflect its prominent market presence within the Christian community, favorable trend of operating earnings, superior risk-adjusted capitalization, prudent asset liability matching and solid enterprise risk management practices. Thrivent Financial maintains a high quality capital structure, which utilizes no debt and full retention of all product-related risks on its balance sheet.
The ratings also recognize efforts in expanding its membership base into the Christian community and the favorable persistency it enjoys as a result of its loyal membership base. Thrivent Financial maintains a diversified product portfolio that is intended to be complementary for its membership needs over their life cycle. As a result, it maintains some exposure to product lines with higher risk, including long term care and variable annuities, albeit variable annuity risk as measured by net amount at risk has been declining. Additionally, while there is some exposure to these riskier product liabilities, Thrivent Financial’s reserves are weighted towards ordinary life, which is viewed as a more creditworthy liability profile.
Offsetting rating factors include emerging losses within its legacy long term care block and exposure to living benefit guarantees within variable annuities. Additionally, Thrivent historically maintained an elevated commercial mortgage loan to capital ratio, although this is now more in line with industry averages. Finally, Thrivent has a large percentage of reserves with interest sensitivity with a higher than average percentage of annuities lacking surrender charge protection. This exposes Thrivent to spread compression given the low interest rate environment or disintermediation risk within its annuity block should interest rates rise significantly, albeit at a reduced level of risk given its loyal membership base.
Positive rating movement is unlikely in the near term. A negative rating action could occur as a result of sizeable credit impairments or higher losses in long term care relative to total earnings, a shift in the business mix toward lower creditworthy product lines or a material increase in riskier assets relative to risk-adjusted capitalization.
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.
Key insurance criteria reports utilized:
- A.M. Best's Liquidity Model for U.S. Life Insurers
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for U.S. and Canadian Life/Health Insurers
This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.
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