OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of the primary life insurance subsidiaries of Protective Life Corporation (headquartered in Birmingham, AL), collectively known as Protective Life. Additionally, AM Best has affirmed the Long-Term ICR of “a-” and the existing Long-Term Issue Credit Ratings (Long-Term IR) of Protective Life Corporation. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of these subsidiaries and ratings.)
The ratings reflect Protective Life’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
The ratings of Protective Life and its life subsidiaries continue to reflect its very strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and diversified and generally favorable operating results. Protective Life has a well-established core competency as an acquirer of life and annuity blocks of business, which have contributed to earnings growth and allowed it to realize scale-related operating efficiencies. While Protective Life’s balance sheet has equity and interest rate risk embedded in its variable annuity book, which AM Best would expect to have its net amount at risk increase significantly during the equity market declines in the first quarter of 2020, it benefits from a comprehensive hedging program.
These strengths are offset partially by volatile statutory operating earnings and recent declines on risk-adjusted capital as a result of its acquisition strategy. Protective Life’s operating returns and risk-adjusted capital also benefit from significant utilization of captive solutions for XXX and AXXX reserves on a statutory basis, which qualitatively diminishes reported capitalization ratios. AM Best notes that volatility in the economy following the COVID-19 pandemic will likely continue to impact the life insurance and annuity blocks and the assets backing those products. Protective has benefited historically from demonstrated support from its ultimate parent, Dai-ichi Life Holdings, Inc. (headquartered in Tokyo, Japan), and AM Best expects that additional capital support, if needed, would be provided by its ultimate parent as a result of the COVID-19 pandemic.
Protective Life also maintains a relatively high level of real estate-related investments in its portfolio relative to its capital and surplus, and AM Best believes the company’s strong and consistent operating cash flows, liquidity resources and financial flexibility partially have mitigated any concern regarding these investments.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” have been affirmed with a stable outlook for the following primary life insurance subsidiaries of Protective Life Corporation:
- Protective Life Insurance Company
- Protective Life and Annuity Insurance Company
- West Coast Life Insurance Company
- MONY Life Insurance Company
The following Long-Term IRs have been affirmed with a stable outlook:
Protective Life Corporation—
-- “a-” on $400 million 3.4% senior unsecured notes, due 2030
-- “a-” on $300 million 8.45% senior unsecured notes, due 2039
Protective Life Global Funding— “aa-” program rating
-- “aa-” on all outstanding notes issued under the program
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