OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of A+ (Superior) and the issuer credit rating of “aa-” of The Savings Bank Life Insurance Company of Massachusetts (SBLI-MA) (Woburn, MA).
The ratings of SBLI-MA reflect its leading position as a low-cost term life insurance provider, the benefits it derives from its well-recognized brand name in Massachusetts, favorable risk-adjusted capitalization and high quality investment portfolio.
The revised outlook reflects SBLI-MA’s lowering trend in statutory operating earnings, as compared with their peers, heavy reliance on XXX financing with a large reinsurance company and an expected decline in risk-adjusted capitalization. The absolute capital for 2014 is higher than the prior period due to a recently completed reserve financing transaction with a highly rated reinsurance counterparty, which replaced all historical reserve financing transactions to fund excess XXX reserves for term business (inforce and new business) with a $455 million surplus note. A.M. Best, however, remains concerned with the company’s heavy reliance on XXX financing solutions and the potential for the inability to obtain reserve financing in the future. A.M. Best also notes the company’s current business mix and limited business profile, which produces modest statutory operating earnings compared with their peers. While operating results for 2014 are positive, they have declined in the current year, as compared with the prior year, due to unfavorable retained mortality and a one-time claim expense due to the social security death match industry issue.
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