OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has downgraded the Financial Strength Rating to A (Excellent) from A+ (Superior) and the Long Term Issuer Credit Rating to “a+” from “aa-” of The Savings Bank Life Insurance Company of Massachusetts (SBLI-MA) (Woburn, MA). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.
The ratings of SBLI-MA reflect its strong brand and position as a low-cost term life insurance provider in its target market, offset by product concentration and declining surplus and capital trends.
The ratings downgrades reflect SBLI-MA’s overall modest profitability, reliance on reserve financing and modestly lower quality of capital relative to peers. While capitalization is reduced from historical higher levels, risk-adjusted capital remains acceptable for the ratings. A.M. Best notes SBLI-MA’s efforts to diversify its product mix through growth in its BOLI business along with continued geographic expansion outside of Massachusetts. However, the company’s in-force business profile, which is concentrated in term life sales, remains narrow in scope. While A.M. Best views SBLI-MA’s diversified sales growth positively, a more broad-based liability profile and higher returns is not anticipated over the short to medium term.
Earnings have fluctuated in recent periods due to a combination of costs associated with infrastructure investment and new business sales strain along with mortality results, which were pressured by higher claims due to the social security death match industry issue in 2014.
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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