Press Release - MARCH 17, 2017
A.M. Best Affirms Credit Ratings of Ameritas Life Insurance Corp. and Subsidiary
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 17, 2017
The ratings affirmations reflect Ameritas’ continued maintenance of very strong risk-adjusted capitalization and a high quality balance sheet, as well as the organization’s favorable business profile. Ameritas has historically reported growth in GAAP equity and modest financial leverage, which is primarily representative of its surplus note. A.M. Best notes that Ameritas has used excess capital to fund several acquisitions over the past 18 months. Ameritas recently purchased a sizable block of retirement business from the Guardian Life Insurance Company of America, strategically growing its footprint in that market. Despite this, risk-adjusted capital continues to be strong, managed to a level in excess of 500% at each entity and on a consolidated basis. The organization’s favorable business profile reflects its diverse distribution channels in which it markets its group dental and vision coverages, and its life and annuity products that have reported favorable growth over the past few years.
While the various block and entity acquisitions have provided top line growth in several business segments, the organization’s operating results were unfavorably impacted by the transactions due to various one-time charges and the impact of reinsurance transactions. Additionally, A.M. Best notes that Ameritas continues to report statutory operating losses within its ordinary life line of business. Ameritas divested its Calvert Investments, Inc. entity, which closed late in the second half of 2016 and included several unfavorable one-time impacts to financial results. A.M. Best views this divestiture favorably.
Despite the decline in operating results, Ameritas reported favorable revenue trends across products and increasing net investment income. The organization maintains a generally conservative investment profile, with the largest portion of its assets allocated to highly rated corporates, and low exposure to below investment grade bonds relative to industry norms. A.M. Best notes that Ameritas has material investments in mortgages and real estate-related assets relative to its capital and surplus – in excess of 100% at year-end 2016. However, impairments related to these asset classes have been modest of late and the commercial mortgage portfolio has a low average loan size, favorable loan-to-value ratios and the majority is written with personal guarantees (i.e., with recourse).
The following Long-Term IR has been affirmed:
The Union Central Life Insurance Company (merged into Ameritas Life effective July 1, 2014)—
— “a-” on $50 million 8.20% surplus notes, due 2026
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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