Best’s News & Research Service - January 10, 2020 09:10 AM (EST)
AM Best Affirms Credit Ratings of LIA Holdings Ltd. and Its Subsidiaries
- January 10, 2020 09:10 AM (EST)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of the domestic and international operating entities of LIA Holdings Ltd. (Lombard International) (United Kingdom). These entities include Lombard International Life Assurance Company (Philadelphia, PA) and its wholly owned subsidiary, Lombard International Life Assurance Company of New York (New York, NY) along with Lombard International Assurance S.A. (Luxembourg), Lombard International Life Assurance Company (Bermuda) Ltd. (Bermuda), and Lombard International Life Ltd. (Bermuda). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb-” of Lombard International. The outlook of these Credit Ratings (ratings) is stable. Lombard International, the ultimate parent of the above entities, is owned by funds managed by the Tactical Opportunities Group of The Blackstone Group Inc. [NYSE: BX].
The ratings reflect Lombard International’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Lombard International maintains a solid position in the privately placed European and U.S. life and annuity markets. Lombard International’s business and liability profile is lower risk, as it is primarily a separate account platform in which policyholders take the investment risk. As a result, separate accounts comprise the vast majority of total assets. There are no living benefit guarantees and mortality risk is minimal, with only a minimal amount retained per life, as the vast majority is reinsured with a variety of high quality reinsurers. Lombard International’s operations also are supported by its very strong balance sheet, with the majority of its general account assets held in cash, investment grade bonds and policyholder loans. Its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strongest level and benefits from the group’s lower risk liability structure.
Lombard International continues to experience positive growth trends in its assets under administration, driven by good net deposits and strong investment performance, while at the same time controlling general expenses. AM Best expects Lombard International to produce favorable, and more stable results over time as it executes on its ultra-high net worth private placement strategy and increases its scale.
Partially offsetting these positive rating factors are the challenges related to operating in the niche ultra-high net worth business, including the complexity of the customized products and services offered. Lombard International also remains susceptible to an ever-changing regulatory landscape with respect to domestic and international taxation. AM Best notes that the low-volume, high-premium nature of the private placement market and the volatility of capital markets also can impact the company’s overall financial performance.
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 provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.