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Best’s News & Research Service - March 23, 2022 03:10 PM (EDT)

AM Best Affirms Credit Ratings of The Penn Mutual Life Insurance Company and Its Subsidiaries

  • March 23, 2022 03:10 PM (EDT)
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Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa-” (Superior) of The Penn Mutual Life Insurance Company (Penn Mutual Life) (Horsham, PA) and its wholly owned subsidiaries, The Penn Insurance and Annuity Company (Wilmington, DE), Vantis Life Insurance Company (Windsor, CT) and The Penn Insurance and Annuity Company of New York (Brewster, NY). These companies collectively are referred to as Penn Mutual Group (Penn Mutual). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “a” (Excellent) on the $200 million, 6.65% surplus notes, due 2034, and the Long-Term IR of “a” (Excellent) on the $200 million, 7.625% surplus notes, due 2040, issued by Penn Mutual Life. The outlook of these Credit Ratings (ratings) is stable.

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

Penn Mutual’s risk-adjusted capitalization is considered to be at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supported by the company’s consistent growth in capital over the past few years and its efficiently managed investment portfolio, which contains some built-in enhanced risk but continues to produce favorable net yields relative to peers and industry benchmarks. The balance sheet is further supported by good liquidity metrics and overall financial flexibility of the organization. The group’s leverage and coverage metrics are fairly modest and considered adequate to support its current operations.

Penn Mutual historically has reported favorable growth in its core life insurance products, though more-recently this has been offset with stagnant annuity sales due to the pandemic. The company benefits from its diversity in product offerings, distribution capabilities and partnerships, which has resulted in increased market share, albeit unchanged in 2020. AM Best notes that Penn Mutual has benefited positively from its application and underwriting tool, ACE, which has allowed advisers access to real-time data, particularly in the current challenging environment. Overall, Penn Mutual’s GAAP operating performance significantly improved in 2021, compared with a decline in the prior year, due to continued strong sales across many business lines and additional investment income. In addition, AM Best notes that statutory operating metrics continue to be strained somewhat, related to sales of certain products, unfavorable mortality and new reserve regulations affecting some increased volatility.

Penn Mutual’s focus on risk management reflects its formalized framework, including well-communicated risk appetite and tolerances, multi-combined scenario stress testing and a risk culture that is strictly embedded across all levels of the organization.

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 Performance Assessments, 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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