Best’s News & Research Service - March 10, 2023 12:06 PM (EST)
AM Best Affirms Credit Ratings of Berkshire Hathaway Life Insurance Co of Nebraska and First Berkshire Hathaway Life Insurance
- March 10, 2023 12:06 PM (EST)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa+” (Superior) of Berkshire Hathaway Life Insurance Company of Nebraska (BHLN). AM Best also has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) of First Berkshire Hathaway Life Insurance Company (First Berkshire Hathaway Life) (New York, NY). The outlooks of these Credit Ratings (ratings) are stable.
The ratings of BHLN reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The ratings of First Berkshire Hathaway Life reflect its balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, limited business profile and appropriate ERM.
BHLN’s risk-adjusted capitalization improved to the strongest level in 2021, as measured by Best’s Capital Adequacy Ratio (BCAR), with capital and surplus rising to over $9.2 billion from just under $7.5 billion in the previous year. Despite a decline to just over $8.7 billion through the third quarter of 2022 projected BCAR results remain favorable. Also seeing an improvement is the company’s operating performance, which returned to statutory profitability in 2021, and through the third quarter of 2022, after a net loss for year-end 2020. Partially offsetting BHLN’s favorable balance sheet strength assessment and improved operating performance are the longer-term fluctuating statutory operating trends, driven by the deal flow and mortality results on certain blocks, as well as exposure to interest-sensitive structured settlement business. Furthermore, the company paid a $925 million dividend to the parent company in third-quarter 2022, which negatively impacted balance sheet strength metrics despite remaining favorable overall.
First Berkshire Hathaway Life also experienced growth in capital and maintained the strongest level of risk-adjusted capitalization as measured by BCAR. The company continues to have a highly liquid asset portfolio that is heavily invested in cash and short-term investments despite investing some of its cash allocation toward fixed income securities in 2022. Partially offsetting the company’s favorable balance sheet strength assessment is its fluctuating operating results and limited product and geographic diversification. AM Best notes that both entities serve a specific purpose within the greater Berkshire Hathaway organization; therefore, most of these unfavorable factors are part of their overall strategy and are actively monitored by senior management.
Both BHLN and First Berkshire Hathaway Life receive substantial financial, operational and other resource support from their parent company, National Indemnity Company.
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.