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Best’s News & Research Service - December 29, 2021 02:57 PM (EST)

AM Best Assigns Preliminary Credit Assessment to Sutton Life Re, Ltd.

  • December 29, 2021 02:57 PM (EST)

Oldwick //BestWire// - AM Best has assigned a Preliminary Credit Assessment (PCA) to Sutton Life Re, Ltd. (Sutton Life Re) with a Financial Strength Assessment of A- pca (Excellent) and a Long-Term Issuer Credit Assessment of “a-” pca (Excellent). The outlook assigned to these PCAs is stable.

The PCAs reflect Sutton Life Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. Sutton Life Re is a recently established Bermuda reinsurer affiliated with Sixth Street Partners, LCC (Sixth Street), a global investment firm that has committed significant capital into the life/annuity insurance space over the past year.

On Dec. 3, 2021, Allianz Life Insurance Company of North America announced reinsurance agreements with Resolution Life Group Holdings LP and Talcott Resolution Life Insurance Company (Talcott), the latter of which is affiliated with Sixth Street and Sutton Life Re. Under the terms of the transaction, approximately $20 billion of fixed-indexed annuity liabilities will be placed with Talcott and Sutton Life Re. Upon the closing of this transaction by year-end 2021, Talcott and Sutton Life Re will manage $111 billion in liabilities and surplus on a proforma basis.

AM Best evaluated Sutton Life Re’s proforma balance sheet and projected operating results as part of the PCA with point-in-time assessments, and concluded that the entity would have a very strong balance sheet and adequate operating performance. Results from Best’s Capital Adequacy Ratio show the proforma balance sheet post-transaction at the assessed level of strongest, due in part to relatively conservative investment allocations. Furthermore, Sutton Life Re will utilize resources and already established policies and procedures from Talcott for investment management and for its enterprise risk management framework. AM Best anticipates that Sutton Life Re will engage in future transaction activity as it executes its strategy of engaging in reinsurance flow transactions and block acquisitions.

Despite these favorable assessments, AM Best notes that as with any projection, actual results may vary substantially leading to different outcomes. Confidence in projections is bolstered by experienced management teams at Sutton Life Re and its immediate holding company, and the availability of support from affiliates in the organization.

This press release relates to Preliminary Credit Assessments that have been published on AM Best’s website. For all assessment information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual assessments 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 and Assessment 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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