OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has upgraded the Financial Strength Rating (FSR) to B+
(Good) from B (Fair) and the Long-Term Issuer Credit Ratings (Long-Term
ICR) to “bbb-” from “bb+” of Nassau Life Insurance Company and PHL
Variable Insurance Company, collectively known as Nassau Insurance
Group. Concurrently, AM Best has upgraded the FSR to B+ (Good) from B
(Fair) and the Long-Term ICRs to “bbb-” from “bb+” of Nassau Life and
Annuity Company, Nassau Life Insurance Company of Kansas (Overland Park,
KS) and Constitution Life Insurance Company (Houston, TX). In addition,
AM Best has upgraded the Long-Term ICR to “b+” from “b” of The Nassau
Companies of New York, Inc. (Nassau of NY) and upgraded its existing
Long-Term Issue Credit Ratings (Long-Term IRs). The outlook of these
Credit Ratings (ratings) remains stable. All companies are headquartered
in Hartford, CT, unless otherwise specified. (See below for a detailed
listing of the Long-Term IRs.)
The ratings of Nassau Insurance Group reflect its balance sheet
strength, which AM Best categorizes as adequate, as well as its marginal
operating performance, neutral business profile and appropriate
enterprise risk management (ERM). The rating upgrades reflect the
group’s improved ERM capabilities including improved internal controls
as demonstrated by the recent remediation of all remaining material
weaknesses inherited at the time of the acquisition of Nassau of NY.
Nassau Insurance Group also maintains a formal risk appetite statement
with defined risk tolerances and limits. Stress testing and sensitivity
analysis under multiple scenarios also are performed.
The group continues to maintain a strong level of risk-adjusted
capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as
well as improved liquidity, with the addition of access to a Federal
Home Loan Bank credit facility, access to approximately $140 million in
cash and short-term investments at Nassau of New York and increased
dividend capacity at Nassau Life Insurance Company, as well as access to
committed capital from the group’s ultimate parent.
While liquidity has improved at PHL Variable Insurance Company, it has
experienced significant losses in recent periods primarily due to
increasing mortality in its universal life insurance line of business,
and additional capital contributions likely will be needed over the near
term. In addition, operating results for the overall Nassau Insurance
Group have fluctuated over the past several years in part due to costs
associated with the resolution of all material legacy litigation, as
well as increased mortality in its universal life insurance block and
several one-time events. Furthermore, premiums had been declining for a
number of years due to a focus on improving capitalization and liquidity
while developing a suite of new products for the marketplace. AM Best
notes that premiums have increased over the most-recent period primarily
due to an increase in annuity sales. AM Best expects a general
improvement in the company’s operating performance over the medium term,
as management continues to focus on streamlining operations and
investing in growth as it re-enters the marketplace with new products.
The following Long-Term IRs have been upgraded with stable outlooks:
The Nassau Companies of New York, Inc.—
–to “b+” from “b” on $300
million 7.45% senior unsecured notes, due 2032 (approximately $253
million outstanding)
Nassau Life Insurance Company—
–to “bb-” from “b+” on $175 million
7.15% surplus notes, due 2034 (approximately $126 million outstanding)
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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Michael Adams
Senior Financial Analyst
+1 908
439 2200, ext. 5133
[email protected]
Christopher
Sharkey
Manager, Public Relations
+1 908 439
2200, ext. 5159
[email protected]
Kate
Steffanelli
Senior Financial Analyst
+1 908 439
2200, ext. 5063
[email protected]
Jim
Peavy
Director, Public Relations
+1 908 439
2200, ext. 5644
[email protected]
