OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the Financial Strength Rating to A-(Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” from “bbb+” for GBU Financial Life (GBU or the Society) (Pittsburgh, PA). The outlooks of these Credit Ratings (ratings) have been revised to stable from positive.
The rating actions reflect GBU’s increasing membership base and favorable operating performance, as the Society continues to manage interest rate spreads in the face of declining investment yields. While crediting rates remain relatively high compared with industry peers, A.M. Best notes that interest rate spreads remain healthy, with some cushion to reduce crediting rates if necessary. In addition, overall premium growth trends have been favorable in recent periods as GBU continues to attract new members through new fraternal benefit programs and mergers with other fraternal organizations. Furthermore, unassigned funds continue to increase, resulting in a solid level of risk-adjusted capitalization despite an increase in investment risk in recent periods.
Partially offsetting these positive rating factors is the Society’s limited business profile, as over 50% of direct premiums are derived from Pennsylvania and fixed annuities account for almost all of direct premiums and reserve liabilities. Partially mitigating this concern is the adequate surrender protection on its annuities and the fact that the assets and liability cash flows are well-matched. A.M. Best believes that GBU’s risk-management capabilities remain relatively weak for its risk profile. A.M. Best notes that the Society has strengthened certain aspects of its risk-management framework over the most recent period, including enhancements to its cyber risk management and the formalized documentation of operational procedures related to investments, accounting and disaster recovery. However, the establishment of a formal risk measuring and monitoring program to address key risks is still in the process of being developed. A.M. Best will continue to monitor GBU’s progress in strengthening its risk management capabilities.
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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.