AM Best

AM Best Affirms Credit Ratings of Sammons Financial Group, Inc. and Its Subsidiaries


Michael Adams
Associate Director
+1 908 439 2200, ext. 5133

Rosemarie Mirabella
+1 908 439 2200, ext. 5892

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644


OLDWICK - JULY 30, 2021 10:48 AM (EDT)
AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of Midland National Life Insurance Company (Midland National) and North American Company for Life and Health Insurance (North American) (both domiciled in West Des Moines, IA). In addition, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) and the Long-Term Issue Credit Rating of “a-” (Excellent) on the $200 million, 7.0% senior unsecured notes, due 2043, the $500 million, 4.45% senior unsecured notes, due 2027, and the $850 million, 3.35% senior unsecured notes, due 2031, of Sammons Financial Group, Inc. (Delaware). The outlook of these Credit Ratings (ratings) is stable. Sammons Financial Group, Inc. is an intermediate holding company for Midland National and North American, and is indirectly owned by Sammons Enterprises, Inc. Midland National and North American – the group’s key life/health insurance subsidiaries – are jointly referred to as the Sammons Financial Group (SFG).

The ratings reflect SFG’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.

SFG maintains a very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), despite a noticeable decline over the past year due to a significant increase in annuity sales and a strategic decision to acquire lower rated corporate bonds during the pandemic. The overall balance sheet strength has been supported historically by increasing levels of capital and surplus and a relatively high quality general account investment portfolio. In addition, SFG maintains very good liquidity with strong cash flows from operations, access to the Federal Home Loan Bank and surrender charge protection on the majority of its inforce annuities. The group also has good financial flexibility with demonstrated access to the capital markets if needed.

SFG benefits from a diverse distribution platform, which includes personal producing agents, independent marketing organizations, broker/dealers and banks, as well as credit unions. In addition, SFG has increased its focus and expansion into the registered investment adviser channel over the past year. The group also offers a wide array of product offerings with generally favorable market positions in its core lines of business and has recently entered the pension risk transfer market with some initial success. This diversification, along with historical investments in digital capabilities, has enabled the company to significantly increase premiums over the past year despite industry-wide sales disruptions from the pandemic and is supportive of the current business profile assessment. In addition, SFG maintains an extensive enterprise risk management program that is continually evolving and is commensurate with its risk profile.

While SFG has generally produced solid earnings in the past five years, they have been pressured by spread compression within the annuity line of business. Additionally, life insurance-related earnings have experienced some volatility due to lack of scale and spread compression within its interest-sensitive universal life insurance segment, along with an increase in mortality over the past year due to the COVID-19 pandemic. Although SFG’s general account investment portfolio experienced an elevated level of impairments over the past year, it was primarily confined to investments within airline securitizations in its asset-backed securities portfolio as well as its investments in the energy sector, two areas hardest hit by the pandemic. AM Best believes that SFG may experience further impairments over the near to medium term but will remain within a manageable range for the group.

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 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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