CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has placed the 'BBB+' Insurer Financial Strength (IFS) rating of Athene Annuity & Life Assurance Company (Athene) on Rating Watch Negative.

The rating action follows today's announcement that Athene will be entering into an agreement to acquire Presidential Life Corporation (NASDAQ: PLFE) and its wholly owned subsidiary, Presidential Life Insurance Company (Presidential). The company expects to finance the purchase price of approximately $415 million with internal resources.

While Fitch views this transaction as consistent with expectations that Athene would deploy capital to grow its fixed annuity business, Fitch is concerned with the pace of transactions Athene has initiated since 2011 and the company's ability to fully integrate each new acquisition. Given the company's limited track record Fitch will continue to monitor the company's operating results in relation to management's initial assumptions.

Fitch anticipates resolving the Rating Watch after completing a thorough review of Presidential Life and following further discussions with management regarding operational and strategic plans. Fitch notes that Presidential's earnings have been impacted by the company's high minimum crediting rates in the low interest rate environment so the agency needs greater clarity regarding Athene's plans to improve earnings. Upon resolution of the Rating Watch, Fitch's expectation is that Athene's rating will either be affirmed at its current level or downgraded one notch.

The key rating triggers that could result in a return to a Stable Outlook include:

--Completion of review of Presidential Life to ensure run-rate profitability and capitalization are commensurate with the current rating-level;

--Sustained maintenance of risk-based capital (RBC) above 350%;

--Broad, sustained profitability and diversification in reinsured business.

The key rating triggers that could result in a downgrade include:

--Decline in RBC below 300%

--Deterioration in the performance of reinsured blocks, resulting in run-rate operating losses for four consecutive quarters.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Sept. 22, 2011).

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651018

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Fitch Ratings
Primary Analyst
Tana M. Higman, +1-312-368-3122
Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Bradley S. Ellis, CFA, +1-312-368-2089
Director
or
Committee Chairperson
Brian C. Schneider, CPA, +1-312-606-2321
Senior Director
or
Media Relations:
Brian Bertsch, +1-212-908-0549
Email: brian.bertsch@fitchratings.com

Source: Fitch Ratings