AM Best

AM Best Upgrades Credit Ratings of Gerber Life Insurance Company; AffirmsCredit Ratings of Certain Western & Southern Financial Group, Inc.’s Subsidiaries


Stratos Laskarides
Senior Financial Analyst
+1 908 882 1995

Wayne Kaminski, FLMI, MBA
Associate Director
+1 908 882 1916
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310

Al Slavin
Senior Public Relations Specialist
+1 908 882 2318


OLDWICK - FEBRUARY 07, 2024 11:39 AM (EST)
AM Best has upgraded the Financial Strength Rating (FSR) to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “aa” (Superior) from “a+” (Excellent) of Gerber Life Insurance Company (Gerber Life) (White Plains, NY). Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa” (Superior) of The Western and Southern Life Insurance Company (WSLIC), Western-Southern Life Assurance Company, Columbus Life Insurance Company (Columbus Life), Integrity Life Insurance Company, National Integrity Life Insurance Company (Greenwich, NY) and The Lafayette Life Insurance Company (Lafayette Life). These companies have traditionally been the key life insurance and annuity carriers of Western & Southern Financial Group, Inc. (W&SF Group), and are referred to collectively for rating purposes as WSFG. W&SF Group is an intermediate stock holding company of the ultimate parent company, Western & Southern Mutual Holding Company. All companies are domiciled in Cincinnati, OH, unless otherwise specified. In addition, AM Best has affirmed the Long-Term ICR of “a” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IR) on the senior unsecured notes of W&SF Group, and the Long-Term IRs of “a+” (Excellent) of WSLIC’s surplus notes. (See below for a detailed listing of the Long-Term IRs). The outlook of all these Credit Ratings (ratings) is stable.

The ratings of Gerber Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and very strong enterprise risk management (ERM). The ratings of Gerber Life also reflect implicit support from the greater organization, W&SF Group.

Since being acquired over five years ago in 2018 by WSLIC, Gerber Life’s strategic importance to the W&SF Group’s business profile and strategy has increased, driven by rapid growth in guaranteed individual life insurance sales through direct-to-consumer distribution capabilities, during a period of high demand since COVID-19, which has created a better balance for the group between longevity and mortality risks, reserves and earnings. The ERM assessment of Gerber Life has been revised to very strong, from appropriate, now that Gerber Life is further integrated into the operations, economic capital modeling and cashflow testing processes of W&SF Group. Similar to how W&SF Group has done with a long history of previous acquisitions, AM Best expects W&SF Group to continue to support Gerber Life and to further integrate the entity into the group in the intermediate term, within certain branding parameters that were agreed upon with the licensor, Nestlé S.A.

The ratings of WSFG reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and very strong ERM.

The ratings of WSFG reflect its strongest overall balance sheet strength assessment and positive premium growth. WSFG’s risk-adjusted capitalization continues to be assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and the group does not utilize captives or permitted accounting practices. WSFG also has strong financial flexibility with a diverse source of additional available liquidity, which includes a line of credit at W&SF Group that has been strategically drawn and repaid to offset new business strain. WSFG has generated strong net cash flows for the last five years, and it has modest financial and operating leverages, as well as strong interest coverage. While the overall investment portfolio is of good credit quality, allocations to below-investment-grade bonds, mortgage loans, equities and alternative investments remain elevated compared to industry benchmarks. Earnings are diversified across the W&SF Group’s multiple product and channel offerings and brands, including some fee-based wealth and asset management businesses, which are augmented by growth from new sources of distribution.

Partially offsetting these positive rating factors, is the volatile trend in statutory operating performance and profitability ratios such as return on equity, over the last five years, primarily due to new business strain across both core life and annuity lines of business. In particular, W&SF Group has significantly enhanced individual annuity sales, which also has the potential to continue driving increases to investment spread income, invested assets and available capital. The group continues to have higher interest rate exposure given its reserve profile, with a material portion of earnings still driven by annuities, despite strong life sales through Lafayette Life, Columbus Life and Gerber Life. While W&SF Group has expanded its product footprint and improved some market positions, it faces ongoing competition from both mutual and stock companies in the highly competitive U.S. life and annuity market. Finally, the ratings also recognize continued capital maintenance guarantees from WSLIC to certain insurance subsidiaries and its affiliate, Lafayette Life.

AM Best will continue to closely monitor the consistency of and further improvements to statutory operating earnings and return metrics, particularly once inforce annuity reserves and required capital are released, which may result in enhanced risk-adjusted capitalization over the intermediate term.

The following Long-Term IRs have been affirmed with stable outlooks:

Western & Southern Financial Group, Inc.—

— “a” (Excellent) on $500 million 5.75% senior unsecured notes, due 2033

 The Western and Southern Life Insurance Company —

— “a+” (Excellent) on $500 million 3.75% surplus notes, due 2061

— “a+” (Excellent) on $500 million 5.15% surplus notes, due 2049

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.


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