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 the primary life insurance subsidiaries
of Protective Life Corporation (headquartered in Birmingham, AL),
collectively known as Protective Life. Additionally, AM Best has
affirmed the Long-Term ICR of “a-” (Excellent) and the existing
Long-Term Issue Credit Ratings (Long-Term IRs) of Protective Life
Corporation. At the same time, AM Best has affirmed the FSR of A
(Excellent) and the Long-Term ICR of “a” (Excellent) of Protective
Property & Casualty Insurance Corporation (Protective P&C)
(St. Louis, MO) The outlook of these Credit Ratings (ratings) is
stable. (See below for a detailed list of these subsidiaries and
ratings.)
The ratings of Protective Life reflect its balance sheet
strength, which AM Best assesses as very strong, as well as its
strong operating performance, favorable business profile and
appropriate enterprise risk management (ERM).
The ratings of Protective Life also reflect its trend of a very
strong level of risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR), favorable liquidity metrics and
demonstrated financial support from its parent, Dai-ichi Life
Holdings, Inc (Dai-ichi). Protective Life functions as the North
America growth engine for Dai-ichi. While Protective Life’s balance
sheet has equity and interest rate risk embedded in its variable
annuity book, the group benefits from a comprehensive hedging
program. Protective Life has moderate investment risk compared to
the individual life benchmark, mitigated by strong financial
flexibility. Financial and operating leverage at Protective Life
remain within AM Best’s expectations.
The company’s operating results are strong, benefiting from
consistent and diversified net income. Protective Life continues to
demonstrate a well-established core competency as an acquirer of a
diverse list of blocks of business, including life, annuity and
asset protection blocks of business, which have been folded into
the company and now contribute to earnings growth and allowed it to
realize scale-related operating efficiencies.
Protective Life’s business profile benefits from diversity in
its distribution channels and product lines, along with continued
investments in innovation. The company’s ERM is appropriate for its
risk profile, which benefits from embedded stress testing of a wide
range of scenarios.
The ratings of Protective P&C 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. The ratings also reflect rating lift from its
parent, Protective Life.
Protective P&C’s balance sheet strength assessment is
supported by the strongest level of risk-adjusted capitalization,
as measured by BCAR, good asset quality, adequate balance sheet
liquidity and yearly organic surplus growth derived from earnings,
which is partially offset by annual dividends to its parent. The
balance sheet strength is somewhat diminished by Protective
P&C’s extensive use of unrated dealer-owned reinsurance
arrangements.
AM Best considers the company’s operating performance to be
adequate based on its consistent track record of profitability.
Return metrics and underwriting ratios are generally approximate to
its composite peer group of warranty insurers. In recent years,
Protective P&C’s operating performance has benefitted from
favorable market dynamics such as elevated used car valuations and
pricing; however, operating metrics are returning to more normal
levels with the improvement in macroeconomic conditions.
Protective P&C specializes in providing coverage for vehicle
service contracts and guaranteed asset protection products for
automobiles, marine craft, power sport vehicles and recreational
vehicles, which are sold primarily through franchise dealers and
independent agents. The neutral business profile reflects the
company’s concentration of underwriting risk in the highly
competitive auto warranty market, offset by its geographic
diversification. The company’s ERM is appropriate for its risk
profile and is integrated with that of Protective Life.
Rating enhancement has been afforded to Protective P&C due
to the implied support from its higher-rated parent, its
integration into the organization and its support of the
organization’s asset protection strategy.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-”
(Superior) have been affirmed with a stable outlook for the
following primary life insurance subsidiaries of Protective Life
Corporation:
- Protective Life Insurance Company
- Protective Life and Annuity Insurance Company
- West Coast Life Insurance Company
- MONY Life Insurance Company
The following Long-Term IRs have been affirmed with stable
outlook:
Protective Life Corporation- — “a-” (Excellent) on $400 million
3.40% senior unsecured notes, due 2030 — “a-” (Excellent) on $300
million 8.45% senior unsecured notes, due 2039
Protective 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. For more information,
visit www.ambest.com.
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Stephen Vincent Senior Financial Analyst +1 908
882 1705 stephen.vincent@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Ricardo Longchallon Senior Financial Analyst +1
908 882 2019 ricardo.longchallon@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com