OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of “aa-” of Banner Life Insurance Company (Banner Life) (Frederick, MD) and William Penn Life Insurance Company of New York (William Penn) (Valley Stream, NY). Banner Life and William Penn are referred to collectively as the Legal & General America Group (LGA) and represent the U.S. operations of the ultimate parent, Legal & General Group Plc (L&G), a worldwide insurance organization headquartered in the United Kingdom. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect LGA’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
LGA’s business profile remains favorable, despite a heavy dependence upon the highly competitive and commoditized term life market, reflecting its very strong market position and well-recognized brand.
Profitability has been volatile and AM Best expects LGA to experience continued volatility in its statutory accounting results due to high levels of statutory expense strain anticipated from new business production and the effects of periodic reserve financing transactions as it grows its pension risk transfer (PRT) business. The PRT business has seen strong growth since inception, and is expected to continue that trend in the near term. LGA’s favorable capitalization, in addition to parental support on an as needed basis, enhances LGA’s ability to grow its businesses.
Over the past few years, LGA implemented a strategic asset allocation program whereby the group reduced its allocation to publicly issued investment grade bonds and increased its allocations to high-yield and non-144A private placement bonds and direct commercial mortgage loans. While AM Best expects these asset classes to increase the overall yield of the invested asset portfolio and improve asset-liability duration matching, these assets classes are less liquid and expose the group to potential asset impairments.
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