OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa+” of Thrivent Financial for Lutherans (headquartered in Minneapolis, MN) (Thrivent). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Thrivent’s 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).
The ratings recognize Thrivent’s favorable persistency from its loyal membership base and efforts to continue to grow despite the challenging environment. Thrivent maintains a diversified product portfolio that is intended to be complementary to its clients’ needs over their life cycles. As a result, it maintains some exposure to product lines with higher risk, including long-term care and variable annuities, although variable annuity risk with guaranteed living benefits make up a relatively small portion of the company’s total in-force business. Thrivent’s reserves are weighted toward ordinary life, which AM Best views as a more creditworthy liability profile. Thrivent maintains a high quality capital structure, which utilizes no debt and full retention of all product-related risks on its balance sheet. Additionally, its Best’s Capital Adequacy Ratio (BCAR) continues to be maintained at the strongest level, and Thrivent utilizes a sophisticated ERM program to manage and report risks, which include a multitude of stress-testing scenarios. Thrivent’s ERM program has helped it better manage conditions under the current COVID-19 pandemic.
Offsetting rating factors include continued losses within its legacy long-term care block and exposure to living benefit guarantees within variable annuities. Additionally, Thrivent maintains a slightly elevated commercial mortgage loan portfolio as a percentage of total assets, which has continued to perform well during the pandemic so far. Finally, Thrivent has a large percentage of interest-sensitive reserves and a higher-than-average percentage of annuities lacking surrender charge protection. This exposes Thrivent to spread compression given the continued low interest rate environment, and disintermediation risk within its annuity block should interest rates rise significantly. AM Best also notes Thrivent’s challenges to continue to grow premiums and membership in the competitive life insurance market landscape.
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