OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Ratings of “aa+” of Thrivent Financial for Lutherans (Appleton, WI) and its subsidiary, Thrivent Life Insurance Company (Minneapolis, MN) (together known as Thrivent Financial). The outlook of these Credit Ratings (ratings) is stable.
Thrivent Financial’s ratings reflect its prominent market presence within the Christian community, favorable trend of operating earnings and superior risk-adjusted capitalization. Thrivent Financial maintains a high quality capital structure, which utilizes no debt and full retention of all product-related risks on its balance sheet.
The ratings also recognize efforts in expanding its membership base into the Christian community and the favorable persistency it enjoys as a result of its loyal membership base. Thrivent Financial maintains a diversified product portfolio that is intended to be complementary for its membership’s needs over their life cycle. As a result, it maintains some exposure to product lines with higher risk, including long term care and variable annuities, albeit variable annuity risk as measured by net amount at risk has been declining. Additionally, while there is some exposure to these riskier product liabilities, Thrivent Financial’s reserves are currently weighted towards ordinary life, which is viewed as a more creditworthy liability profile.
Offsetting rating factors include continued losses within its legacy long term care block and exposure to living benefit guarantees within variable annuities. Additionally, Thrivent Financial maintains an elevated commercial mortgage loan portfolio as a percentage of total assets. Finally, Thrivent Financial has a large percentage of reserves with interest sensitivity with a higher than average percentage of annuities lacking surrender charge protection. This exposes Thrivent Financial to both spread compression given the continued low interest rate environment and disintermediation risk within its annuity block should interest rates rise significantly. Also noted are the challenges to continue to grow premiums and the company’s membership base.
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