AM Best Affirms Credit Ratings of Talcott Life Re, Ltd.

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Talcott Life Re, Ltd. (TLR) (Hamilton, Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TLR’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Formerly registered as Sutton Life Re Ltd., TLR is a recently established Bermuda reinsurer affiliated with Sixth Street Partners, LCC (Sixth Street), a global investment firm that has committed significant capital into the life/annuity insurance space since 2021. In December 2021, Allianz Life Insurance Company of North America announced reinsurance agreements with Resolution Life Group Holdings LP and Talcott Resolution Life Insurance Company (Talcott), the latter of which is affiliated with Sixth Street and TLR. Under the terms of the transaction, approximately $20 billion of fixed-indexed annuity liabilities were placed with Talcott and TLR. The transaction formally closed at year-end 2021, resulting in Talcott and TLR managing $111 billion in liabilities and surplus.

Results from Best’s Capital Adequacy Ratio (BCAR) show the balance sheet at the assessed level of strongest, due in part to relatively conservative initial investment allocations for year-end 2021 and pro forma 2022. TLR has utilized resources and already established policies and procedures from Talcott for investment management and for its ERM framework. AM Best anticipates that TLR will engage in future transaction activity as it executes its strategy of engaging in reinsurance flow transactions and block acquisitions.

Despite these favorable assessments, AM Best notes that along with many others in the industry, TLR has substantial unrealized losses due to the rising interest rate environment’s impact on long-duration assets. Mitigating this risk, however, is the company’s favorable liquidity driven by prudent asset liability management, inter-company lines of credit, non-utilized third-party financing, and the implicit support of a large ultimate parent. AM Best will continue to monitor the evolution of asset holdings as TLR’s portfolio is redeployed over time to target allocations.

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 Performance Assessments, 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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