NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) has assigned an insurance financial strength rating (IFSR) of A- to Gleaner Life Insurance Society (Gleaner), a fraternal benefit society domiciled in Adrian, Michigan. The Outlook for the rating is Stable.
The rating reflects Gleaner’s conservative balance sheet, stable net operating gains, and favorable capital trends. Gleaner is the ninth largest fraternal benefit society based on net admitted assets and is focused on writing life insurance and annuity products. The Society has reported solid, consistent profitability across its life and annuity business lines, which has resulted in steady capital growth – 20% increase since year-end 2009. Gleaner’s corporate governance processes are adequate for an organization of its size and its enterprise risk management (ERM) practices are fairly progressive compared with similarly-sized fraternals. Moreover, Gleaner continues to maintain an appropriate investment portfolio, in credit quality and duration, with recent efforts to better match the Society’s liability duration through a bond duration lengthening program (an initiative borne out of the ERM process). Lastly, the Society has started to build out a complementary financial planning services business, which should help diversify the earnings sources of the organization as well as capture potential synergies.
Tempering these strengths is Gleaner’s exposure to spread compression due to its substantial concentration in interest-sensitive products. This is partially offset by the Society’s track record of sound product structure discipline and its newly-introduced product suite. Gleaner also has notable exposure, although manageable, to reinvestment risk along with credit/default risk in its fixed income portfolio. KBRA notes the Society’s sizeable allocation to corporates is managed well through diversification by sector and geography. Gleaner has a substantial concentration of its members within two states, in addition to an aging membership. Like its fraternal peers, the Society may be challenged to maintain its current membership in the future. Additionally, Gleaner is susceptible to elevated surrenders in a rising rate environment, and the potential exists for this to strain liquid resources and force ill-timed asset sales. Finally, KBRA will continue to monitor the results of Gleaner’s book of legacy products to ensure that any headwinds resulting from high guaranteed rates are manageable through to maturity.
The ratings are based on KBRA’s Global Insurer & Insurance Holding Company Rating Methodology published on October 10, 2017.
A full report will soon be made available on www.kbra.com.
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