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 (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) 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). AM Best also has affirmed the FSR of A++ (Superior) and the Long-Term ICRs of “aa+” (Superior) of 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. In addition, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Standard Security Life Insurance Company of New York (SSL) (New York, NY).

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

The ratings reflect Reliance Standard’s 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. The ratings of Reliance Standard also reflect the strategic importance and high degree of integrations with Tokio Marine. Aside from those factors, the group maintains a very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and it has produced the best operating earnings in the last five years, as challenges brought on by COVID through 2020 and 2021 were overcome in 2022. The ratings also consider Reliance Standard’s reasonable operating leverage, financial leverage and interest coverage at the intermediate holding company, DFG, as well as the group’s very strong risk management capabilities.

Partially offsetting these positive rating factors stem from the group’s investment profile, which includes elevated levels of higher risk and less liquid assets. Commercial mortgage loans and below-investment-grade bonds both exceed industry averages and AM Best continues to monitor these allocations.

Safety National’s ratings reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and very strong enterprise risk management. Safety National’s ratings also consider the group’s strongest level of risk-adjusted capitalization, as measured by BCAR, historically profitable overall operating performance, return measures that far outpace the industry, as well as its position as an industry leader in excess workers’ compensation. Partially offsetting these positive rating factors is the group’s exposure to schedule BA assets. This allocation represents sizable portions of Safety National’s invested assets and surplus and are elevated compared to the composite.

SSL’s ratings recognize its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. SSL’s ratings also reflect its high degree of integration and strategic importance to Tokio Marine. The company maintains the strongest level of risk-adjusted capitalization, as measured by BCAR, with a conservative portfolio mainly consisting of investment-grade fixed-income securities. The company’s operating performance over the last five years has been consistently positive, with a large increase in premium and profitability from 2021 through 2022. This increase was driven by large rate increases in New York on its Paid Family Leave product. Partially offsetting these positive rating factors is the company’s somewhat constrained business profile given its product and geographic concentration.

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

Reliance Standard Life Global Funding II—
— “aa+” (Superior) on $500 million 6.151% senior secured medium-term notes, due 2028

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 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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