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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 26, 2016 12:28 PM (EDT)
A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings of “aa-” of Banner Life Insurance Company (Banner Life) (Frederick, MD) and William Penn Life Insurance Company of New York (William Penn) (Valley Stream, NY). Banner Life and William Penn are collectively referred to as the Legal & General America Group (LGA) and represent the U.S. operations of the ultimate parent, Legal & General Group Plc (L&G), a worldwide insurance organization headquartered in the United Kingdom. The outlook for each rating is stable.
The rating affirmations reflect LGA’s strong competitive position in the U.S. term life marketplace, where it currently ranks eighth, as measured by term life annualized new business premiums for 2015. The rating actions also reflect LGA’s solid operating performance, as measured on a U.S. GAAP and International Financial Reporting Standard basis, which has been enhanced by LGA’s efficient expense structure, variable cost distribution network strategy and disciplined approach to mortality underwriting. LGA maintains a solid stand-alone risk-adjusted capitalization that has been underpinned by a high-quality, long-term bond portfolio. A.M. Best also recognizes LGA’s strategic importance to L&G, which has provided explicit support when needed to sustain LGA’s new business growth.
While positive rating factors reflect LGA’s strong term life market position and its strategic importance to the parent, LGA’s business profile remains narrow and heavily dependent upon the highly competitive, lower-margin commoditized term life market. A.M. Best also expects LGA to experience volatility in its statutory accounting results due to high levels of statutory expense strain anticipated from new business production and the effects of periodic reserve financing transactions. Additionally, over the past few years, LGA implemented a strategic asset allocation program whereby the group reduced its allocation to publicly issued investment grade bonds and increased its allocations to high-yield and non-144A private placement bonds and direct commercial mortgage loans. The organization’s private placement securities and direct commercial mortgage loans are managed by outside asset managers. While these asset classes are expected to increase the overall yield of the invested asset portfolio and improve asset-liability duration matching, these assets classes are less liquid and expose the group to potential asset impairments should the global economic recovery stall or deteriorate. A.M. Best notes that this asset re-allocation did not materially impact LGA’s risk-adjusted capitalization.
This press release relates to rating(s) 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.
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