AM Best Affirmed National Guardian Life Insurance Company (NGLIC) Financial Strength Rating (FSR) of A (Excellent) and Issuer Long Term Credit Rating (Long ICR) of “a” (Excellent) ( Madison, WI). In addition, AM Best affirmed the long-term issue credit rating of bbb+ (good) on the $47 million, 6.45% excess notes, due 2035, issued by NGLIC. The outlook for these Credit Ratings (ratings) is stable.
At the same time, AM Best downgraded the FSR to B++ (Good) from A (Excellent) and the long-term ICR to “bbb” (Good) from “a” (Excellent) of Commercial Travelers Life Insurance Company (Commercial Travelers) ( Albany, N.Y.). These ratings have been placed under review with development implications.
NGLIC’s ratings reflect the strength of its balance sheet, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate management of business risks. NGLIC continues to maintain the highest level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), which was strengthened by the sale of several legacy business blocks. In addition, NGLIC has improved the quality of its capital over the past several years through the repayment of excess notes. NGLIC enjoys a leading position in the provident life insurance market and continues to seek opportunities for sales expansion through alternative channels and new product offerings with a recent focus on dental and vision business. AM Best expects the group to maintain sufficient operating results with lower interest charges and continued profit contributions from its core business segments in the future.
Business Travelers’ ratings reflect the strength of its balance sheet, which AM Best rates as very strong, as well as its marginal operating performance, limited business profile and appropriate management of business risks.
The downgrades to the rating and under review with the development of commercial traveler status implications reflect the fact that AM Best no longer considers the business strategically important to NGLIC following the pending sale of the company. third-party entity with an expected closing date in the third quarter of 2022. Due to this pending sale and the termination of a reinsurance agreement between NGLIC and Commercial Travelers, the strategic importance of Commercial Travelers to the group has been drastically reduced and will soon be non-existent. Given AM Best’s current lack of available information about the third-party acquirer, including financial condition, operating strategy and other material factors that could positively or negatively affect traveling salesman ratings after the transaction, the entity was placed under review with development repercussions.
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