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A.M. Best Affirms Ratings of Securian Financial Group, Inc. and Its Subsidiaries


CONTACTS:

Keith Behrmann
Financial Analyst — L/H
(908) 439-2200, ext. 5733
keith.behrmann@ambest.com

Dan Hofmeister
Financial Analyst — P/C
(908) 439-2200, ext. 5385
dan.hofmeister@ambest.com

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - FEBRUARY 03, 2016 02:36 PM (EST)
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of Minnesota Life Insurance Company (Minnesota Life) and its key subsidiary, Securian Life Insurance Company (Securian Life). In addition, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of Securian Casualty Company (Securian Casualty). A.M. Best also has affirmed the FSR of A- (Excellent) and the ICRs of “a-” of American Modern Life Insurance Company (American Modern Life), a subsidiary of Minnesota Life, and its subsidiary, Southern Pioneer Life Insurance Company (Southern Pioneer Life). These subsidiaries are the life/health and property/casualty subsidiaries of Securian Financial Group, Inc. (SFG) (Delaware) and collectively operate under the name Securian Financial Group (Securian).

Concurrently, A.M. Best has affirmed the ICR of “a-” of SFG, an intermediate holding company under the ultimate parent, Minnesota Mutual Companies, Inc., and affirmed the issue rating of “a” on $125 million 8.25% surplus notes due 2025, issued by Minnesota Life. The outlook for all ratings is stable, and all companies named above are headquartered in St. Paul, MN, except where specified.

The ratings reflect Securian’s leading market position in its core operating segments and expanding product portfolio to support premium growth, improve diversification and access additional market opportunities. The group’s consolidated earnings have been consistently favorable benefiting from diversified sources of earnings with a good balance between mortality, morbidity, spread margins and fee revenue. Securian’s risk-adjusted capitalization is considered strong relative to its insurance, investment and business risks and is qualitatively enhanced by utilization of economic capital modeling and comprehensive capital stress testing embedded in its enterprise risk management framework. Additionally, A.M. Best notes that there is only modest utilization of financial and operating leverage within the consolidated organization.

Partially offsetting rating factors are the high level of competition in Securian’s core markets that may challenge its ability to sustain long-term organic growth. The group has moderated sales of its fixed annuities to limit its risk profile, however, older policies with higher guaranteed minimum crediting rates continue to experience spread compression as its portfolio yield declines. Securian’s strong penetration in the group life insurance market exposes the organization to significant mortality risk in the event of a large-scale mortality event. However, A.M. Best notes that stress testing demonstrates that Securian can maintain adequate risk-adjusted capitalization following a mortality event.

The ratings of American Modern Life and Southern Pioneer Life reflect their ownership by Minnesota Life and strong risk-adjusted capitalization supported by a high credit quality investment portfolio; however, these entities are primarily in run-off, which limits their overall business profile.

The ratings of Securian Casualty recognize its strong risk-adjusted capitalization and continued profitable growth. In addition, A.M. Best considers Securian Casualty’s growing role within the organization, as it has enabled Securian to deliver a broad range of credit insurance product offerings and services to the financial institution market.

A.M. Best believes the ratings of Minnesota Life and Securian Life could receive positive rating actions with a material increase in the scope and depth of the group’s business profile outside of group life insurance. Factors that could result in negative rating actions include deterioration of Securian’s market position within its core segments leading to declining premium trends, a material decline in risk-adjusted capitalization from operating losses or investment impairments, unfavorable equity market performance increasing the company’s exposure to the net amount at risk of the guaranteed benefits on its variable annuity, and a large-scale mortality event that results in a material operating loss.

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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