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FOR IMMEDIATE RELEASE
OLDWICK - JULY 15, 2016 10:03 AM (EDT)
A.M. Best has affirmed the financial strength ratings of A++ (Superior) and the issuer credit ratings of “aa+” of State Farm Life Insurance Company and State Farm Life and Accident Assurance Company (together referred to as State Farm Life). The outlook for each rating is stable. Both companies are domiciled in Bloomington, IL.
State Farm Life Insurance Company represents the core life insurance affiliate of State Farm. The ratings reflect A.M. Best’s opinion that State Farm Life is an integral member of State Farm, marketing a wide array of protection and asset accumulation products, while benefitting from the competitive advantages derived from State Farm’s exclusive multi-line career agency system. The ratings also recognize State Farm Life’s superior stand-alone risk-adjusted capitalization and profitable operating performance primarily generated from its stable core ordinary life segment.
Banking and other financial services are offered through affiliates to further enhance the sale of personal lines products. The State Farm group’s main distribution channel is its exclusive independent agency force, which along with mass advertising, has contributed to high customer retention rates and below average expense ratios.
Partially offsetting these positive rating factors are the challenges in managing its interest-sensitive liabilities, including its closed blocks of variable universal life and annuities through the continued low interest rate and volatile equity market environments. A.M. Best also acknowledges State Farm Life’s commercial real estate exposure through its investments in direct commercial loans and commercial mortgage-backed structured securities (CMBS). Thus far, State Farm Life’s well-diversified direct commercial loans have performed well, and its CMBS are entirely in the highest rated tranches, mainly earlier vintages with a high degree of subordination. State Farm Life and Accident Assurance Company markets the same product portfolio as State Farm Life through the same exclusive multi-line career agency system, with a focus entirely in New York and Wisconsin.
Key factors that could lead to a negative rating action include a decline in consolidated adjusted capital and deterioration in quality of capital, if State Farm Life is viewed as less strategic to its parent State Farm Mutual Automobile Insurance Company, or if the company is negatively impacted by regulatory issues relating to the U.S. Department of Labor fiduciary rule or other federal regulation.
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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.