NOVEMBER 11, 2020 09:14 AM (EST)

AM Best Upgrades Credit Ratings of Delphi Financial Group, Inc. and Its Subsidiaries


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FOR IMMEDIATE RELEASE

OLDWICK - NOVEMBER 11, 2020 09:14 AM (EST)
AM Best has upgraded the Financial Strength Rating to A++ (Superior) from A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “aa+” from “aa” of the life/health subsidiaries of Delphi Financial Group, Inc. (DFG) (Wilmington, DE): Reliance Standard Life Insurance Company (Schaumburg, IL) and First Reliance Standard Life Insurance Company (New York, NY) (together referred to as Reliance Standard), as well as DFG’s property/casualty subsidiaries: Safety National Casualty Corporation, Safety Specialty Insurance Company (both domiciled in St. Louis, MO) and Safety First Insurance Company (Chicago, IL) (together referred to as Safety National). DFG is a direct subsidiary of Tokio Marine & Nichido Fire Insurance Co., Ltd., whose ultimate parent is Tokio Marine Holdings, Inc. (Tokio Marine), Japan’s largest non-life insurance organization.

Concurrently, AM Best has upgraded the Long Term ICR to “a+” from “a” and the existing Long-Term Issue Credit Ratings (Long-Term IR) of DFG. Lastly, AM Best has upgraded the Long-Term IRs to “aa+” from “aa” on the outstanding medium term notes issued under the funding agreement backed-securities (FABS) program of Reliance Standard Life Global Funding II. The outlook for these Credit Ratings (ratings) is stable. (Please see below for a detailed list of the Long-Term IRs.)

The ratings of Reliance Standard reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and very strong enterprise risk management (ERM). Reliance Standard’s upgrade is primarily a result of a higher degree of integration and strategic importance to its ultimate parent, Tokio Marine. In addition, Reliance Standard maintains a very strong level of risk-adjusted capitalization and favorable operating results, despite some spread compression within its interest-sensitive annuity business. The ratings also consider Reliance Standard’s very strong risk management capabilities, a reasonable level of financial and operating leverage and favorable interest coverage ratios at DFG, its intermediate holding company. Partially offsetting these positive rating factors are elevated levels of higher risk and less liquid assets within its general account investment portfolio, including commercial mortgage loans. While the company’s overall liability profile has shifted more toward interest-sensitive annuities, which AM Best views as a less creditworthy product line, spreads remain favorable despite some spread compression due to the prolonged low interest rate environment. AM Best expects Reliance Standard’s earnings to remain favorable over the near to medium term; however, it may face pressure if interest rates decline or remain at current levels.

The ratings of Safety National reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, neutral business profile and very strong ERM. The ratings upgrade is primarily a result of Safety National’s increasing strategic role in the organization and reflects the commitment from DFG and Tokio Marine to support the ongoing operations. Safety National’s ratings also consider its strongest level of risk-adjusted capitalization, historically profitable overall operating performance and specialized market profile as an industry leader in excess workers’ compensation. Partially offsetting these positive rating factors are ongoing adverse development attributed to the company’s nature of business and the group’s somewhat constrained business profile, as a significant amount of its premiums is generated from excess workers’ compensation. Despite these concerns, the ratings recognize Safety National’s solid overall profitability and AM Best’s expectation of a continued generating of retained earnings.

The following Long-Term IR has been upgraded:

Delphi Financial Group, Inc.—

— to “a-” from “bbb+” on $175 million fixed/floating rate junior subordinated debentures, due 2037

The following Long-Term IRs have been upgraded:

Reliance Standard Life Global Funding II— to “aa+” from “aa” program rating

— to “aa+” from “aa” on all outstanding notes issued under the program

The following Long-Term IRs have been assigned with a stable outlook:

Reliance Standard Life Global Funding II—

— “aa+” on $350 million 2.15% senior secured medium term notes, due 2023

— “aa+” on $400 million 2.50% senior secured medium term notes, due 2024

— “aa+” on $400 million 2.75% senior secured medium term notes, due 2025

— “aa+” on $350 million 2.75% senior secured medium term notes, due 2027

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.


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