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Best’s News & Research Service - May 12, 2023 09:04 AM (EDT)

AM Best Affirms Credit Ratings of Athora Holding Ltd. Subsidiaries

  • May 12, 2023 09:04 AM (EDT)
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London //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of Athora Life Re Ltd. (Athora Re) (Bermuda) and Athora Ireland plc (Athora Ireland) (Ireland). Both entities are wholly owned subsidiaries of Athora Holding Ltd. (Athora) (Bermuda), the non-operating holding company of the group. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Athora’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as the group’s adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings factor in the strategic importance of Athora Re and Athora Ireland to Athora.

Athora’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was at the strongest level at year-end 2022. Net required capital is expected to increase over the medium term as the group continues to allocate a higher proportion of its investment portfolio to higher-yielding asset classes. Nevertheless, BCAR scores are expected to stay comfortably at the strongest level over the forecast period, supported by capital drawdowns to fund any prospective acquisitions.

Athora’s balance sheet strength assessment takes into account the group’s solid financial flexibility, having demonstrated a good level of access to debt markets and bank facilities. The assessment also considers Athora’s sophisticated asset-liability management, which is necessary to manage interest rate risk arising on its target life insurance liabilities and credit risk on its private credit portfolio. The group manages its interest rate risk by targeting a close-to-zero duration gap, and credit risk is mitigated partially by the significant private credit experience of its strategic shareholder, Apollo Global Management, Inc.

The group has a track record of adequate operating performance, evidenced by a five-year (2018-2022) weighted average return on equity of 9%. There is uncertainty in Athora’s forecast performance as the group’s profitability will be dictated by the successful implementation of its investment and hedging strategies and the execution of large, low volume transactions. Should this strategy be implemented successfully, AM Best expects the group to be able to achieve strong overall returns over the medium to long term.

Since it was spun off from Athene Holding Ltd. (now Apollo Global Management, Inc.) in 2018, Athora has established a robust position as a European life insurance consolidator, as well as savings and pensions provider. At year-end 2022, the group had EUR 74 billion of assets under administration and operations in Belgium, Bermuda, Germany, Ireland, Italy and the Netherlands. The group is in the process of strengthening its presence in Germany and has appetite for further expansion.

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 specialising 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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