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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 16, 2015 02:08 PM (EDT)
A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings (ICR) of "aa" of the core life insurance subsidiaries of Western & Southern Financial Group Inc. (WSFG). The subsidiaries include: The Western and Southern Life Insurance Company (WSLIC), Western-Southern Life Assurance Company, Columbus Life Insurance Company, Integrity Life Insurance Company, National Integrity Life Insurance Company (Goshen, NY) and The Lafayette Life Insurance Company. Concurrently, A.M. Best has affirmed the ICR of "a" and the issue rating of "a" on $500 million 5.75% senior unsecured notes due 2033 of WSFG. The outlook for all ratings is stable. All companies are domiciled in Cincinnati, OH, except where specified.
The ratings reflect the group's strong capitalization, high quality surplus, favorable GAAP and statutory earnings. A.M. Best views the quality of capital as high given modest use of reinsurance, no utilization of captives, modest financial and operating leverage and no permitted accounting practices. Financial flexibility is viewed as strong with strong interest coverage and holding company liquidity. Additionally, the ratings recognize the diversity in its product offerings and distribution channel along with the additional earnings diversification provided by its asset management business. WSFG offers a mix of life insurance, annuities, retirement and investment products that are sold through career agents, independent agents, banks, broker dealers and other financial institutions, which are targeted to middle market individuals and investors. Finally, the ratings also recognize guarantees from WSLIC to all insurance subsidiaries and its affiliate The Lafayette Life Insurance Company.
Partially offsetting factors include operating returns that are somewhat lower than industry aggregates due in part to strong capitalization levels, moderate retention of redundant reserves and statutory strain associated with new business. Interest sensitive business lines remain high, which exposes the group to potential disintermediation risk in a rapidly rising interest rate environment. However, this risk is partially mitigated by adequate surrender charge protection and modest deferred acquisition costs to equity ratios. Finally, while WSFG has expanded its branding, distribution and geographic footprint, its overall U.S. market position has remained relatively unchanged in recent years due to heightened competition within the U.S. life and annuity market.
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 visit A.M. Best's Ratings & Criteria Center.
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