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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 25, 2013 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A++ (Superior) and issuer credit ratings (ICR) of “aa+” of Guardian Life Insurance Company of America (Guardian Life) (New York, NY) and its core subsidiaries, Guardian Insurance & Annuity Company, Inc. (Wilmington, DE) and Berkshire Life Insurance Company of America (Pittsfield, MA) (together referred to as Guardian).
Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of “a” of Family Service Life Insurance Company, Sentinel American Life Insurance Company (both domiciled in Texas) and Park Avenue Life Insurance Company (Wilmington, DE). A.M. Best also has affirmed the FSR of A (Excellent) and ICR of “a+” of First Commonwealth Insurance Company (Chicago, IL), all subsidiaries of Guardian Life. Concurrently, A.M. Best has affirmed the debt rating of “aa-” on $400 million 7.375% surplus notes due September 30, 2039 of Guardian Life. The outlook for all ratings is stable.
The ratings of Guardian reflect its strong financial strength as a mutual company, which is characterized by superior risk-adjusted capitalization ratios, a generally conservative investment portfolio and sound enterprise risk management (ERM) capabilities. Guardian’s core business segments (individual life, individual disability and group benefits) continue to generate stable operating earnings and cash flows. ERM practices are well developed with utilization of economic capital modeling and capital stress testing. Operating earnings continue to benefit from expense efficiencies and stable inforce profits. Guardian continues to invest in branding, technological innovation and refinements in its distribution channels. Additionally, Guardian has made progress in implementing a number of de-risking initiatives to exit lower margin businesses and further refine its overall business profile.
Offsetting rating factors include costs associated with implementing health care reform and heightened competition within the employee benefits sector. The continued low interest rate environment, albeit improving in recent months, may impact Guardian’s interest-sensitive business lines and pressure earnings. Additionally, Guardian needs to continue to invest in growing its 401(k) business segment to reach critical mass and enhance its overall contribution to its operating profile.
Guardian and its subsidiaries are well positioned at their current rating levels. Negative rating actions could occur for all entities if either capitalization or operating performance fall markedly short of A.M. Best’s expectations.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.