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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 24, 2014 09:47 AM (EDT)
A.M. Best has upgraded the financial strength rating to B+ (Good) from B (Fair) and the issuer credit rating to "bbb-" from "bb+" of Guaranty Income Life Insurance Company (Guaranty Income) (Baton Rouge, LA). The outlook for all ratings is stable.
The upgrade reflects Guaranty Income's improved risk-adjusted capitalization and a reduction in credit risk within its investment portfolio through lower allocations to below investment grade bonds. Risk-adjusted and absolute capital levels have increased due to organic earnings growth and the issuance of a surplus note. Additionally, the upgrade incorporates some improvement in investment spreads and favorable persistency. These positive rating factors are partially offset by Guaranty Income's geographic and business profile concentration and fluctuating earnings, as well as an increase in common stock as a percentage of capital and a reserve profile with high interest rate sensitivity.
Key rating drivers that could lead to positive rating actions include growth in consolidated operating performance and sustained growth in premium levels while maintaining favorable risk-adjusted capitalization. Negative rating actions could occur if Guaranty Income were to experience a material deterioration in consolidated operating performance, reduced risk-adjusted capitalization levels or a material increase in investment risk.
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.