AM Best Downgrades Issuer Credit Rating of Puritan Life Insurance Company of America

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” (Good) from “bbb+” (Good) and affirmed the Financial Strength Rating of B++ (Good) of Puritan Life Insurance Company of America (Puritan) (Scottsdale, AZ). The outlooks of these Credit Ratings (ratings) is stable.

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

Puritan’s Long-Term ICR downgrade reflects the revision of the balance sheet assessment to strong from very strong. The balance sheet is impacted by significant use of affiliated reinsurance with Heritage Life Insurance Company. This represents a high concentration in counterparty exposure, which lowers the overall quality of the balance sheet. Risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains at the strongest assessment. Partially offsetting the elevated reinsurance exposure concentration is adequate liquidity and a good quality investment portfolio, which is mostly managed by Guggenheim Partners Investment Management (GPIM).

Puritan’s operating performance has seen some volatility in the last few years both from market factors as well as non-recurring items. However, core return metrics have remained in-line with both peers and the adequate assessment. Puritan’s business profile remains limited with increasing geographic diversification offset by increasing product concentration. Strong distribution channels headlined by the Canvas platform continue to perform well. Puritan’s ERM functions are appropriate, supported by a comprehensive risk management framework.

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