AM Best


A.M. Best Affirms Credit Ratings of Protective Life Corp. and Key Subs.; Upgrades Credit Ratings of Protective P&C Ins. Co.


CONTACTS:

Louis Silvers
Senior Financial Analyst – L/H
+1 908 439 2200, ext. 5802
louis.silvers@ambest.com

Edward Zonenberg
Senior Financial Analyst – P/C
+1 908 439 2200, ext. 5135
edward.zonenberg@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - MARCH 28, 2018 09:13 AM (EDT)
A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of the primary life insurance subsidiaries of Protective Life Corporation (Protective Life) (headquartered in Birmingham, AL). Additionally, A.M. Best has affirmed the Long-Term ICR of “a-” and the existing Long-Term Issue Credit Ratings (Long-Term IR) of Protective. The outlook of these Credit Ratings (ratings) is stable.

A.M. Best also has upgraded the FSR to A (Excellent) from A- (Excellent) and the Long-Term ICR to “a” from “a-” of Protective Property & Casualty Insurance Company (Protective P&C) (St. Louis, MO). The outlook of these ratings is stable.

The ratings of Protective P&C reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect rating lift from the lead rating unit, The Dai-ichi Life Insurance Company, Limited (DL), a subsidiary of Dai-ichi Life Holdings, Inc., with its leading market position as a global insurer.

Protective P&C specializes in providing coverage for extended vehicle service contracts and guaranteed asset protection products sold through independent dealers and franchise dealers. The company does business in all 50 states and in Puerto Rico.

The ratings of Protective P&C were upgraded based on a consistent record of strong profitable results. Protective P&C produced double digit pre-tax returns on revenue and surplus in nine of the past ten years, mainly due to profitable underwriting and investment returns on par with industry averages.

The ratings of Protective Life and its life subsidiaries continue to reflect its strong risk-adjusted capitalization, diversified and generally favorable operating results, along with manageable dividend requirements. Protective Life has a well-established core competency as an acquirer of life and annuity blocks of business and legal entities, which have contributed to organic earnings growth and allowed it to realize scale-related operating efficiencies. Operating return on equities are strong with acquisitions evidencing good underwriting discipline, and earnings growth has been supported by growth within its spread-based stable value program, along with relatively stable spreads within its annuity lines and the impact of tax reform. While Protective Life’s balance sheet has equity and interest rate risk embedded in its variable annuity book, it benefits from a comprehensive hedging program that has reduced the net amount at risk due to strong equity market performance in recent years.

These strengths are offset partially by a declining premium trend particularly within annuities as a result of industry-wide headwinds associated with implementation of the DOL ruling. Protective Life’s operating returns and risk-adjusted capital benefit from significant utilization of captive solutions for XXX and AXX reserves on a statutory basis, which qualitatively diminishes reported capitalization ratios. Although Protective Life maintains above-average financial and operating leverage when compared with similarly rated companies, metrics remain within the guidelines for its ratings. A.M. Best believes the company’s strong and consistent operating cash flows, liquidity resources and financial flexibility partially have mitigated this concern. Protective Life also maintains a relatively high level of real estate-related investments in its portfolio relative to its capital and surplus although it continues to perform well.

For a complete listing of Protective Life Corporation and its subsidiaries’ FSRs, Long-Term ICRs and Long-Term IRs, please visit Protective Life Corporation.

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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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