OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to B+ (Good) from B (Fair) and the Long-Term Issuer Credit Rating to “bbb-” from “bb+” of Equitable Life & Casualty Insurance Company (Equitable) (Salt Lake City, UT). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect Equitable’s balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
The ratings upgrade was based on Equitable’s improved operating performance. Over the last two years, the company delivered improving operating performance through profitable risk revenue development, which was driven by better underwriting scrutiny and increased investment returns. The impact of these adjustments resulted in a strong positive shift in Equitable’s operating gains through the second quarter of 2019.
The company’s balance sheet was strengthened by a significant capital infusion, providing the basis for the execution of its planned business expansion strategy. The improvement in balance sheet strength reflected the application of additional financial commitments to increasing the scale of the organization’s overall operations with particular focus on its annuity business.
In 2018, Equitable’s business profile and company focus were skewed toward the annuity segment with strong development in the multi-year guaranteed annuity business. The company added a fixed-indexed annuity product in 2019 and while it remains diversified in its product offerings, there has been a clear emphasis towards asset accumulation products and services for the period.
The execution of the organization’s ERM program has allowed for better outcomes as it relates to risk selection, investment allocation, counterparty risk management and business retention levels. However, AM Best is concerned about the rate of growth in the annuity segment and the implementation of a more solid capital plan that anticipates more closely the frequency of risk revenue development.
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