OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating (ICR) of “a-” to AAA Life Insurance Company of New York (AAA Life of New York) (Harrison, NY). AAA Life of New York commenced business operations on July 15, 2013, and is a wholly owned subsidiary of AAA Life Insurance Company (AAA Life). The outlook assigned to both ratings is stable.
AAA Life of New York’s ratings reflect the support from AAA Life in the form of an initial capital contribution and an unconditional guarantee of an adequate level of AAA Life of New York capital to meet all of its obligations and liabilities, as well as its strategic role as the New York marketing arm of AAA Life Group. Partially offsetting factors include AAA Life of New York’s limited operating history, modest results to date and initial limited operating scope.
AAA Life, AAA Life of New York and its affiliated reinsurers are collectively referred to as the AAA Life Group. AAA Life writes all new insurance business and reinsures premiums on a quota share basis to designated members of AAA Life Group, as contracted by shareholder and management agreements. AAA Life manages the full administration, investment and insurance operations of all affiliated reinsurers and AAA Life of New York. As a result, A.M. Best considers that all members of AAA Life Group operate as a group. However, due to the nature of the existing ownership structure and business arrangement, AAA Life does not have a majority ownership nor does it retain board control of the reinsurance members of the AAA Life Group. A.M. Best deviated from its “Rating Members of Insurance Groups” methodology by affording the reinsurers of AAA Life Group rating enhancement from AAA Life. As prescribed by the methodology, to be eligible for rating enhancement, an individual company must have a parent with majority ownership, operate under common ownership with the entity providing lift or maintain board control together with common management. In this case, while there is some common management within the group, the respective reinsurance company boards are independent of AAA Life and lack common ownership among the group members.
Factors that mitigate the deviation are the administrative support predominantly provided by AAA Life to the reinsurers, an existing management expense sharing arrangement, common branding that is related to AAA Life and shared by all the companies, and a quota share reinsurance treaty among the various shareholders that ties each reinsurer to the organization.
The affiliated reinsurers of AAA Life are:
- Auto Club Life Insurance Company
- Automobile Club of Southern California Life Insurance Company
- AAA Life Re, Ltd.
- Pacific Beacon Life Reassurance, Inc.
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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