Best’s News & Research Service - November 30, 2023 11:07 AM (EST)
AM Best Affirms Credit Ratings of Securian Financial Group, Inc. and Its Subsidiaries
- November 30, 2023 11:07 AM (EST)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of Minnesota Life Insurance Company and its subsidiary, Securian Life Insurance Company, together referred to as Securian Financial Insurance Group (Securian). AM Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Securian Casualty Company (Securian Casualty). In addition, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Canadian Premier Life Insurance Company (Canadian Premier) (Toronto, Ontario, Canada).
Concurrently, AM Best has affirmed the Long-Term ICR of “a” (Excellent) of Securian Financial Group, Inc. (SFG) (Delaware) and the Long-Term Issue Credit Rating (Long-Term IR) of “a” (Excellent) of SFG’s $500 million, 4.8% senior unsecured notes, due 2048. AM Best also has affirmed the Long-Term IR of “a+” (Excellent) on the $125 million, 8.25% surplus notes, due 2025, issued by Minnesota Life Insurance Company. The outlook of these Credit Ratings (ratings) is stable. All companies named above are headquartered in St. Paul, MN, except where specified.
The ratings reflect Securian’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.
Securian’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), continues to be assessed at the strongest level, and supports the group’s insurance, business and investment risks. The BCAR has fluctuated slightly year-over-year, driven by operating losses and acquisition activity. The group does maintain positive overall liquidity, with several sources of liquidity available if necessary. Financial leverage remains manageable and interest coverage metrics are supportive of Securian’s ratings. Invested assets are mainly of higher credit quality, with good sector diversification and modest allocations to higher risk assets. AM Best notes that Securian has elevated allocations in commercial mortgage loans, but this exposure is partially mitigated by its strong mortgage underwriting program and overall good performance.
Securian remains highly diversified by earnings and distribution, while continuing to expand its reach, most notably in Canada, with the most recent acquisition of Sun Life’s sponsored markets business that closed in February 2023. While earnings have been generally stable in recent years, they have been impacted by some higher mortality, volatility of the financial markets and rapidly rising interest rates. Impacts of rapidly rising rates have primarily resulted in losses on derivatives used to hedge variable products. Securian also has had an overall declining trend in investment yield impacted by one-time reinsurance transactions in 2022.
The ratings of Securian Casualty reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.
Securian Casualty’s balance sheet strength is supported by strongest level of risk-adjusted capitalization, as measured by BCAR, favorable gross leverage measures which compare well to the credit composite average, reflecting low dependence on reinsurance, and a conservative investment portfolio. Operating performance has been profitable although the company’s metrics trail the credit composite average. Securian Casualty has demonstrated a sound understanding of the market it operates in; however, growth has been volatile due to changing market dynamics. The company has an established presence in the contractual liability market and continues to leverage its resources to support future product and market expansions. In addition, the rating reflects enhancement given its integration within the group and remains a significant contributor of earnings and provides added diversification to Securian.
The ratings of Canadian Premier reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. Through organic growth and business acquisitions in recent years, Canadian Premier is becoming increasingly prominent in the finance company and auto-dealer markets, as shown by higher premiums in 2022. The ratings also reflect the continued increased strategic importance of Canadian Premier in regard to its parent.
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.