Best’s News & Research Service - July 22, 2016 09:18 AM (EDT)
A.M. Best Affirms Ratings of Great-West Lifeco Inc. and Its Subsidiaries
- July 22, 2016 09:18 AM (EDT)
Oldwick //BestWire// - A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings (ICR) of “aa” of The Great-West Life Assurance Company (Winnipeg, Manitoba) and its affiliates, London Life Insurance Company (London, Ontario), The Canada Life Assurance Company (CLAC) (Toronto, Ontario), Great-West Life & Annuity Insurance Company (GWL&A) (Greenwood Village, CO) and Great-West Life & Annuity Insurance Company of New York (White Plains, NY) (together referred to as the Great-West Life Group). Concurrently, A.M. Best has affirmed the ICR of “a” and the existing issue ratings of Great-West Lifeco Inc. (Lifeco) (Winnipeg, Manitoba). The outlook for each rating is stable. (See link below for a detailed listing of the companies and ratings.)
The rating affirmations reflect Great-West Life Group’s highly diversified earnings profile by product and geography, strong market position in its core business lines and solid regulatory capital levels. Great-West Life Group maintains diversified insurance, reinsurance and financial services operations, along with its strong enterprise risk management capabilities, which have helped the company withstand interest rate and equity market volatility. The organization has consistently generated significant cash flows from operations and historically has demonstrated its ability to manage its financial leverage and interest coverage within A.M. Best’s expectations for its current ratings. In addition, Lifeco maintains an excellent liquidity posture supported by high-quality investments and credit facilities.
Moreover, A.M. Best recognizes Great-West Life Group’s consolidated position as a market leader in the Canadian individual and group insurance lines, with superior market positions in the wealth accumulation and protection segments. The Canadian distribution systems of Lifeco and its operating companies represent the largest in Canada and serve as a significant competitive advantage, while its conservative pricing discipline and low expense structure enables it to generate favorable operating results. The U.S. operation continues to produce stable earnings contributions, and has grown organically and through recent acquisitions. The European business segments provide further diversification and also have grown significantly through acquisitions in Ireland.
The ratings also reflect the earnings volatility and challenges associated with the current low interest rate environment and volatile equity markets, although the group’s life insurance entities have not experienced the same level of earnings sensitivity from equity market volatility as its competitors. Also noted is Lifeco’s large amount of goodwill and intangibles due to strategic acquisitions. In addition, A.M. Best expects that the group will continue to face challenges associated with growth in its core U.S. business segments due to the highly competitive environment. As the global economy and regulatory environment evolves, A.M. Best expects any potential growth strategies will require a more stringent focus and a longer time horizon to record meaningful growth over the medium to longer term.
For a complete listing of Great-West Lifeco Inc. and its subsidiaries’ financial strength, issuer credit and issue ratings, please visit Great-West Lifeco Inc.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
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