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 and its subsidiary, Thrivent Life Insurance Company (both headquartered in Minneapolis, MN) (together known as Thrivent Financial). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Thrivent Financial’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management.
The ratings also recognize Thrivent Financial’s efforts in expanding its customer membership in the Christian community and the favorable persistency it enjoys due to its loyal membership base. Thrivent Financial maintains a diversified product portfolio that is intended to be complementary to its member’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, although 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 weighted toward ordinary life, which A.M. Best views as a more creditworthy liability profile. In addition, the company maintains a high quality capital structure, which utilizes no debt and full retention of all product-related risks on its balance sheet.
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 a slightly elevated commercial mortgage loan portfolio as a percentage of total assets. Finally, Thrivent Financial has a large percentage of interest-sensitive reserves and a higher-than-average percentage of annuities lacking surrender charge protection. This exposes Thrivent Financial to spread compression given the continued low interest rate environment, and disintermediation risk within its annuity block should interest rates rise significantly. A.M. Best also notes Thrivent Financial’s continued challenges in growing premiums and membership.
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