AM Best Places Credit Ratings of Prudential Annuity Life Assurance Corporation Under Review With Negative Implications

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has placed under review with negative implications the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of Prudential Annuity Life Assurance Corporation (PALAC), headquartered in Newark, NJ.

PALAC’s Credit Ratings (ratings) were placed under review with negative implications following the announcement that Fortitude Group Holdings, LLC (Fortitude) and Prudential Financial, Inc. (Prudential) have entered into a definitive agreement for Fortitude to acquire a portion of Prudential’s in-force legacy variable annuity block and acquire PALAC. The block is valued at $2.2 billion and the all-cash purchase price is $1.5 billion, subject to certain adjustments at closing, plus a capital release to Prudential and an expected tax benefit. The PALAC block primarily consists of non-New York traditional variable annuities with guaranteed living benefits that were issued prior to 2011, which constitute approximately $31 billion or 17% of Prudential’s total in-force individual annuity account values as of June 30, 2021.

The negative implications reflect that PALAC will no longer benefit from the financial strength of Prudential. The transaction is expected to close during the first half of 2022. The ratings will remain under review until the transaction closes, all customary regulatory approvals are received, and AM Best evaluates PALAC’s role in the Fortitude organization.

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