OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and Long-Term Issuer Credit Rating of “a-” of Security Benefit Life Insurance Company (Topeka, KS) and its affiliate, First Security Benefit Life Insurance and Annuity Company of New York (New York, NY). The companies are collectively known as Security Benefit. Concurrently, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb” on the $100 million 7.45% surplus notes, due 2033, issued by Security Benefit Life Insurance Company. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Security Benefit’s balance sheet strength, which AM Best categorizes as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet assessment is supported by material growth in absolute and risk-based capitalization as a result of retained earnings and additional contributions from its parent organization, Eldridge Industries, LLC. However, the investment portfolio maintains high allocations to structured securities and other non-traditional asset classes, which have driven growth in net investment income, but increase the risk profile due to potential liquidity and asset-liability matching issues under certain economic conditions. Operating results have shown sustained improvements on a statutory and U.S. GAAP basis, benefiting from strong interest rate margins and reduced new business strain with the moderation of fixed index annuity sales. Security Benefit’s business profile is viewed as concentrated in annuity products; however, AM Best notes an improved sales mix between fixed, indexed, and variable annuities, as well as a multi-channel distribution structure that provides additional diversification. AM Best notes there is elevated financial leverage at Security Benefit’s parent entities, but interest coverage metrics remain adequate and dividend expectations from Security Benefit are modest.
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