OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Rating of “aa+” of Knights of Columbus (the Order) (New Haven, CT).
The revised outlooks reflect declining operating trends over the latest five-year period due to decreasing investment yields, maintenance of a high dividend payout ratio to policyholders and a decline in first-year single premiums, although net premiums have been stable due to favorable persistency. While the Order has shown modest growth in its membership base, it faces ongoing levels of competition in the fraternal marketplace and challenges in expanding internationally.
The Order’s Credit Ratings (ratings) reflect its long-established presence as a fraternal benefit society, its strong market presence in the Catholic community enhanced by its full-time captive agency force, a large network of local councils and a stable membership base. The ratings also recognize its strong level of risk-adjusted capitalization, enhanced by the good overall credit quality of its investment portfolio, which is well diversified, a defined asset liability management program and a reserve profile concentrated in whole life, which is viewed as highly creditworthy on A.M. Best’s product continuum. While operating results remain positive, net income and capital growth are moderate due to some one-time expense costs, high interest rate guarantees on its individual life product and moderate annuity spreads due to the continuing low interest rate environment. Positive rating actions could occur if operating performance trends positively over time. Negative rating actions could occur if risk-adjusted capital materially declines. Furthermore, negative rating actions could occur if operating performance declines due to a decrease in top-line premium growth or a continuing decline in pre-dividend operating trends. Finally, negative rating actions could occur if the business profile shifts toward riskier products, as measured by A.M. Best’s product risk continuum, resulting in a material change in the risk profile.
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.
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