AM Best Affirms Credit Ratings of Knights of Columbus

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa” (Superior) of Knights of Columbus (the Order) (New Haven, CT). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect the Order’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.

AM Best assesses the Order’s risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), with little volatility over the past few years. The quality of surplus is good due to a good risk profile of liabilities, no prescribed or permitted accounting practices, no use of captives, and no financial leverage. The Order has historically favorable earnings trends primarily driven by the whole life product line, which AM Best considers to be less risky and more creditworthy. The Order’s net operating gain reached a 20+year high in 2023, largely due to an increase in net investment income and a decline in death benefits, partially offset by elevated surrender benefits. Invested assets are of high quality and are highly diversified; this strength is reflected in the Order’s net investment income, which has benefited from consistent growth in invested assets combined with a slight increase in net yield. Knights of Columbus Asset Advisors, the Order’s faith-based investment solution service, has continued to grow its assets under management to approximately $2.1 billion.

Partially mitigating factors include the Order’s limited financial flexibility since the Order does not have current access to public capital markets and is not a member of the Federal Home Loan Bank. The Order’s pre-dividend profitability metrics compare favorably with its peers. The Order also has maintained a higher dividend payout ratio that has resulted in lower post-dividend profitability metrics relative to peers. However, premium growth has been flat in recent years, which effectively enhances profitability metrics due to lower new business strain. Other mitigating factors include an increasing allocation to illiquid assets such as private placements and the competitive nature of the ordinary life and annuity markets that it operates in.

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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