OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of The Empire Life Insurance Company (Empire Life) (Kingston, Ontario, Canada). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of Empire Life. The outlook of the Credit Ratings (ratings) is stable. (See below for details of the Long-Term IRs.) Empire Life is a subsidiary of E-L Financial Corporation Limited (E-L Financial), which operates as a publicly traded Canadian investment and insurance holding company.
The ratings reflect Empire Life’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Empire Life maintains a very favorable risk-adjusted capital position, which supports its business and investment risks. Risk-adjusted capitalization is enhanced by the high credit quality of its investment portfolio, and continual increases in aggregate capital levels due to favorable earnings and debt issuances. Empire Life’s capitalization has supported growth while maintaining levels that support its stressed capital targets. Empire Life’s operating results have been consistently positive in the past five years, including favorable results in 2018 due in part to its diversified revenue stream from the wealth management and insurance segments, and continued solid results from the group benefits segments. The company continues to monitor the product suite and pricing to meet the current economic, regulatory and competitive landscapes.
Conversely, Empire Life retains a fair amount of segregated fund assets, which exposes the company to equity market volatility. In addition to having equity market risks within its product portfolio, Empire Life maintains a higher allocation of equity investments, compared with those of its peers, within its general account investment portfolio. Empire Life continues to face challenges in expanding its operations in its core business lines as a result of continued competition. This is especially the case within the individual insurance segment, in which AM Best believes the company could be challenged to improve earnings and market share against competitors that have larger scale. Despite these challenges, Empire Life’s focus on the smaller employee market niche has been successful and helps mitigate this risk. In addition, the company continues to improve branding and its digital experience for agents and clients, which should assist in improving Empire Life’s visibility and help differentiate it from its competitors.
The following Long-Term IRs of Empire Life have been affirmed with a stable outlook.
-- “bbb+” on CAD 200 million 3.664% fixed/floating rate subordinated debentures, due March 15, 2028
-- “bbb+” on CAD 200 million 3.383% fixed/floating rate subordinated debentures, due Dec. 16, 2026
-- “bbb” on CAD 149.5 million non-cumulative rate reset Series 1 preferred shares.
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