AM Best Affirms Credit Ratings of Delphi Financial Group, Inc. and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa+” (Superior) of the life/health subsidiaries of Delphi Financial Group, Inc. (DFG) (Wilmington, DE): Reliance Standard Life Insurance Company (Schaumburg, IL) and First Reliance Standard Life Insurance Company (New York, NY) (together referred to as Reliance Standard), as well as DFG’s property/casualty subsidiaries: Safety National Casualty Corporation, Safety Specialty Insurance Company (both domiciled in St. Louis, MO) and Safety First Insurance Company (Chicago, IL) (together referred to as Safety National). DFG is a direct subsidiary of Tokio Marine & Nichido Fire Insurance Co., Ltd., whose ultimate parent is Tokio Marine Holdings, Inc. (Tokio Marine), Japan’s largest non-life insurance organization.

Concurrently, AM Best has affirmed the Long Term ICR of “a+” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IR) of DFG. Lastly, AM Best has affirmed the Long-Term IRs of “aa+” (Superior) on the outstanding medium term notes issued under the funding agreement backed-securities (FABS) program of Reliance Standard Life Global Funding II. The outlook for these Credit Ratings (ratings) is stable. (Please see below for a detailed list of the Long-Term IRs.)

The ratings of Reliance Standard reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and very strong enterprise risk management (ERM). Reliance Standard maintains a very strong level of risk-adjusted capitalization and favorable operating results, despite some spread compression within its interest-sensitive annuity business. The ratings also consider Reliance Standard’s very strong risk management capabilities, a reasonable level of financial and operating leverage and favorable interest coverage ratios at DFG, its intermediate holding company. Partially offsetting these positive rating factors are COVID-19-related pressures in the group life insurance segment, elevated levels of higher risk and less liquid assets within its general account investment portfolio, including commercial mortgage loans. While the company’s overall liability profile has shifted more toward interest-sensitive annuities, which AM Best views as a less creditworthy product line, spreads remain favorable despite some compression due to the prolonged low interest rate environment. AM Best expects Reliance Standard’s earnings to remain favorable over the near to medium term; however, it may face pressure if interest rates decline or remain at current levels.

The ratings of Safety National reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and very strong ERM. Safety National’s ratings also consider its strongest level of risk-adjusted capitalization, historically profitable overall operating performance and specialized market profile as an industry leader in excess workers’ compensation. Partially offsetting these positive rating factors are ongoing adverse development attributed to the company’s nature of business and the group’s somewhat constrained business profile, as excess workers’ compensation generates a significant amount of the group’s premiums. Despite these concerns, the ratings recognize Safety National’s solid overall profitability and AM Best’s expectation of a continued generating of retained earnings.

The following Long-Term IR has been assigned with a stable outlook:

Reliance Standard Life Global Finding II—
--“aa+” (Superior) on $350 million 1.51% senior secured medium term notes, due 2026

The following Long-Term IRs has been affirmed with stable outlooks:

Delphi Financial Group, Inc.—
-- “a-” (Excellent) on $175 million fixed/floating rate junior subordinated debentures, due 2037

Reliance Standard Life Global Funding II— “aa+” (Superior) program rating
-- “aa+” (Superior) on all outstanding notes issued under the program

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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