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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 01, 2012 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) and issuer credit rating of aa+ of Knights of Columbus (the Order) (New Haven, CT). The outlook for both ratings is stable.
The ratings of the Order reflect its strong fraternal and insurance presence within the Catholic communities in the United States and Canada, its strong risk-adjusted capitalization as measured by Bests Capital Adequacy Ratio and its consistently positive statutory operating results. The Orders aggregate statutory operating performance is favorable, with the majority of earnings generated from its core ordinary life segment, which is enhanced by favorable persistency due in part to the loyal nature of the Orders members and improved agent productivity. The Order has a strong affinity with its large membership base through its charitable programs and competitive portfolio of life insurance and annuity products.
Somewhat offsetting these strengths are the challenges the Order faces in the low interest rate environment, which has caused a duration mismatch in asset liability management and a decrease in its risk-based capitalization. The Order also has a modest exposure to residential and commercial mortgage-backed securities, including 2006 and 2007 vintage Alt-A securities that are currently in an unrealized loss position. A.M. Best notes that the Orders insurance membership growth has been modest relative to its overall membership base and resources. The increasing competition from large commercial life insurers and the Orders limited distribution channels may be viewed as limiting factors in achieving higher insurance growth on a consistent basis. Nonetheless, A.M. Best believes the Order enjoys a formidable competitive position relative to other Catholic-based fraternal societies in the United States and Canada.
A.M. Best believes that the Knights of Columbus is well positioned at its current rating level. Key rating drivers that may lead to negative rating actions include sustained deterioration in the Orders operating performance, capital erosion due to investment losses or heightened risk appetite.
The methodology used in determining these ratings is Bests Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bests rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: Risk Management and the Rating Process for Insurance Companies and Understanding BCAR for Life/Health Insurers. Bests Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the worlds oldest and most authoritative insurance rating and information source.