Best’s News & Research Service - July 14, 2023 11:29 AM (EDT)
AM Best Affirms Credit Ratings of Guardian Life Insurance Company of America and Its Subsidiaries
- July 14, 2023 11:29 AM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa+” (Superior) of Guardian Life Insurance Company of America (Guardian Life) (New York, NY) and its core subsidiaries, Guardian Insurance & Annuity Company, Inc. (GIAC) (Wilmington, DE) and Berkshire Life Insurance Company of America (Pittsfield, MA) (together referred to as Guardian). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “aa+” (Superior) of Guardian Life Global Funding’s notes, and the Long-Term IRs of “aa-” (Superior) of Guardian Life’s surplus notes. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the Long-Term IRs.)
The ratings reflect Guardian’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).
The group has maintained a solid risk-based capital profile with risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Guardian’s capital profile includes access to capital markets through its moderate use of surplus notes and additional liquidity as a member of the Federal Home Loan Bank. The company also utilizes funding agreement backed notes to support its business strategies. AM Best considers Guardian’s financial and operating leverage ratios to be appropriate for its credit profile. AM Best believes the organization has made substantial progress in executing various key strategic initiatives, positioning itself to achieve sustainable sales and stable operating results, while improving its risk profile by de-emphasizing non-core operations. For example, in 2022, GIAC divested $7.4 billion in variable annuity liabilities, primarily composed of separate account contracts with guaranteed living withdrawal benefit and death benefit riders, to a third-party reinsurer. The group’s capital profile is supported by a well managed and diverse investment portfolio.
The ratings also consider Guardian’s diversified product portfolio, which is supported by strong market positions in its core individual life, individual disability and group insurance markets. The consistency of Guardian’s balance sheet and operating performance are based on its continued low risk profile that is embedded into its ERM program, as well as strong underwriting performance. The company is actively managing its exposure to credit-related risk as part of its ERM process and has demonstrated the ability to withstand prolonged credit exposure should it worsen.
While Guardian has achieved favorable sales growth within its core lines of business in recent years, the company operates in highly competitive markets that have historically resulted in some sales and earnings volatility.
The following Long-Term IRs have been assigned with stable outlooks:
Guardian Life Global Funding – “aa+” (Superior) program rating
— “aa+” (Superior) on $300 million 1.625% senior secured notes, due September 16, 2028
— “aa+” (Superior) on $350 million 3.246% senior secured notes, due March 9, 2027
— “aa+” (Superior) on $450 million 5.500% senior secured notes, due October 28, 2027
The following Long-Term IRs have been affirmed with stable outlooks:
Guardian Life Insurance Company of America—
— “aa-” (Superior) on $400 million 7.375% surplus notes, due 2039
— “aa-” (Superior) on $450 million 4.875% surplus notes, due 2064
— “aa-” (Superior) on $300 million 3.700% surplus notes, due 2070
— “aa-” (Superior) on $350 million 4.850% surplus notes, due 2077
Guardian Life Global Funding – “aa+” (Superior) program rating
—“aa+” (Superior) on all outstanding notes issued under the program
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.