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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 02, 2016 03:58 PM (EST)
A.M. Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb+” of Security Benefit Life Insurance Company (Topeka, KS) and its affiliate, First Security Benefit Life Insurance and Annuity Company of New York (New York, NY). The companies collectively are known as Security Benefit and are wholly owned subsidiaries of Security Benefit Corporation, which is controlled by Guggenheim SBC Holdings, LLC. Concurrently, A.M. Best has revised the outlook to stable from positive and affirmed the Long-Term Issue Credit Rating of “bbb-” on the $100 million, 7.45% surplus notes, due 2033, issued by Security Benefit Life Insurance Company.
The outlook revision to stable from positive reflects an increased concentration to less liquid asset classes, including structured securities and alternative assets as a percentage of statutory capital and strategic approach to asset-liability matching. Additionally, statutory earnings have remained relatively modest and flat, which have contributed to a lack of sustained organic capital growth.
The Credit Ratings (ratings) are supported by the group’s strong market position in its core retirement education market and diversification of its distribution channels relative to its peers. The ratings also acknowledge good surrender charge protection, modest financial and operating leverage at the intermediate holding company level and low minimum guarantee interest rates on its annuity block.
Partially offsetting rating factors are the concentration of the liability profile in interest sensitive annuity products, a higher risk appetite in its overall investment allocation strategy and the potential impact of proposed U.S. Department of Labor (DOL) regulation changes in its core markets. Security Benefit applies a distinct investment strategy relative to the U.S. life industry, with an emphasis on structured securities, short-term investments (Schedule DA) and alternative assets (Schedule BA), with the majority of invested assets allocated to floating rate securities. Furthermore, the DOL fiduciary standard for qualified index and variable annuities may impact sales and profitability in some of Security Benefit’s distribution channels, albeit its risk profile is qualitatively lower than other mono-channel annuity writers.
This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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