OLDWICK, N.J.--(BUSINESS WIRE)--AM Best affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” of the members of Allstate Insurance Group (Allstate). Additionally, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of the members of Allstate New Jersey Insurance Group (collectively referred to as Allstate New Jersey) (headquartered in Bridgewater, NJ). Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa” of the key life/health members of the Allstate Life Group (Allstate Life). At the same time, AM Best has affirmed the Long-Term ICR of “a”, and all existing Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of the ultimate parent, The Allstate Corporation (Allcorp). The outlook of these Credit Ratings (ratings) is stable.
All the above named companies are headquartered in Northbrook, IL, except where specified. (See link below for a detailed listing of the companies and ratings.)
The ratings of Allstate reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).
Allstate’s strong capital position reflects its favorable earnings, which have contributed to organic surplus growth in each of the past five years on a pre-dividend basis. Allstate’s operating results continue to be favorable due to enhanced pricing sophistication, and improved loss cost and expense management while maintaining underwriting discipline. Additionally, Allstate has a significant market presence and favorable overall business profile as one of the largest personal lines writers in the United States. Allstate also benefits from the additional liquidity provided by Allcorp and its subsidiary, Kennett Capital, Inc., and through access to capital markets, lines of credit and its commercial paper program. The group’s favorable margins are attributable to enhanced pricing accuracy and risk optimization, along with its solid core underwriting capabilities, prudent capital management and sizable investment income. Lastly, underwriting results also reflect the favorable impact of Allstate’s ongoing risk management actions, various expense management initiatives and its significant investment in technology, as Allstate has shown the ability to adapt quickly to market trends to ensure continued underwriting and operating profitability.
Partially offsetting these positive rating attributes is Allstate’s inherent exposure to natural disasters due to its expansive market presence throughout the United States. However, Allstate over the past several years has maintained an extensive catastrophe risk exposure management program, including a significantly enhanced property catastrophe reinsurance program, stricter underwriting guidelines, increased deductibles and discontinuance of selected lines of coverage such as earthquake. In addition, this expansive geographic presence provides inherent diversification against the impact of one or a few significant weather events. The group’s underwriting results in recent years have benefited from these risk-management actions. While the group maintains above-average underwriting and investment leverage, relative to industry norms, it has maintained capital levels supportive of its business risks.
The ratings of Allstate New Jersey reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate ERM. Additionally, the ratings recognize the financial strength, ERM and continued support of Allstate Insurance Company, as well as Allcorp.
Allstate New Jersey maintains favorable risk-adjusted capitalization, consistently profitable operating performance and management’s local market knowledge. These positive rating attributes are offset partially by the group’s business concentration within one state, resulting in potential operating variability due to local market disruptions and localized catastrophe weather events. The ratings further recognize the consistent profitability trends in underwriting in recent years, along with the expectation that trends in capitalization and operating performance will continue in the near to medium term.
The ratings of Allstate Life reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and very strong ERM. Additionally, the ratings recognize the financial strength and continued support of Allstate Insurance Company, as well as Allcorp.
Allstate Life’s overall balance sheet strength assessment is supported by its very strong risk-adjusted capitalization and favorable liquidity, as well as the organization’s expertise in stress testing and economic capital modeling. Partially offsetting these strengths are the company’s somewhat higher level of investment risk as a percentage of capital and surplus, which is also higher than industry benchmarks. This risk is mitigated partially by the use of a barbell asset allocation strategy, which allows for longer dated annuity liabilities to be backed by alternative assets, and the utilization of cash flow duration-matched assets for shorter dated liabilities.
Allstate Life’s strong operating performance benefits from its core traditional life and voluntary benefit product sales growth and its favorable underwriting results, which are enhanced by a consistent stream of net investment income. The company continues to manage the run-off of its declining, yet sizable, exposure to interest sensitive business within its annuities segment. Allstate Life’s recognized market presence and strength of distribution across the organization create additional benefits and synergies that drive its ability to compete in its core markets. The company continues to work toward further enhancement of digital capabilities in order to create a streamlined consumer experience and increased efficiency. Allstate Life benefits from a very strong risk culture and governance that has been embedded throughout the organization.
A complete listing of The Allstate Corporation and its property/casualty and life/health subsidiaries’ FSRs, Long-Term ICRs and Long- and Short-Term IRs also is available.
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