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Best’s News & Research Service - June 04, 2021 12:54 PM (EDT)

AM Best Removes From Under Review and Affirms Credit Ratings of Great American Life Insurance Company and Subsidiaries

  • June 04, 2021 12:54 PM (EDT)
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Oldwick //BestWire// - AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issue Credit Ratings (Long-Term ICR) of “aa-” (Superior) of Great American Life Insurance Company (GALIC) and its key subsidiary, Annuity Investors Life Insurance Company (AILIC) (collectively referred to as Great America Life Group). Concurrently AM Best has removed from under review with developing implications and affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Manhattan National Life Insurance Company (Manhattan Life), a life insurance subsidiary of GALIC. The outlook assigned to these Credit Ratings (ratings) is stable. All companies are domiciled in Cincinnati, OH.

These rating actions follow the announcement by Massachusetts Mutual Life Insurance Company (MassMutual) that it has closed on the acquisition of the aforementioned entities and two distribution affiliates that are subsidiaries of GALIC, Great American Advisors, Inc and AAG Insurance Agency Inc for a purchase price of approximately $3.5 billion.

The ratings of Great America Life Group reflect its balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings of Manhattan National reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM.

The acquisition expands MassMutual’s very favorable business profile through further diversification of its product portfolio into the fixed indexed annuity market, along with independent distribution. MassMutual is expected to have a leading top-five annuity market position as a result of this acquisition, and it is expected that GALIC will operate as an independent subsidiary of MassMutual going forward with continued operations in Cincinnati.

AM Best expects risk-adjusted capitalization of the combined entities, as measured by Best’s Capital Adequacy Ratio, to be supportive of the ratings and that GALIC will benefit from the implicit support of MassMutual and the opportunity to cross-sell products between the two organizations. GALIC enhances MassMutual’s business profile and is expected to be a material contributor to earnings while providing further diversification of MassMutual’s distribution and product profile. The invested assets that support GALIC’s liabilities will be managed by MassMutual’s Barings subsidiary. While interest rate sensitivity on MassMutual’s balance sheet will increase GALIC’s overall risk profile relative to embedded interest rate guarantees and product features, it is expected to be well-managed within MassMutual’s ERM framework.

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 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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