The Department of the Treasury and the Internal Revenue Service released new guidance that is “designed to expand the use of income annuities in 401(k) plans.”
OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has removed from under review with negative
implications and affirmed the financial strength rating (FSR) of B-
(Fair) and issuer credit ratings (ICR) of â€œbb-â€ of Liberty Bankers
Life Insurance Company (LBL) and its primary life insurance
subsidiary, American Benefit Life Insurance Company (American
Benefit [formerly Mid-Continent Preferred Life Insurance Company]). Both
companies (referred to collectively as Liberty Bankers) are domiciled in
Oklahoma. The outlook assigned to both companies is negative.
The rating actions for Liberty Bankers primarily reflect the recent
substantial increase in surplus due to $17.65M in cash and income
producing real estate contributed by its ultimate parent, Realty
Advisors, Inc. In addition, the unrealized loss position in its
fixed-income securities portfolio has improved over the most recent
period. However, A.M. Best notes that risk-adjusted capital remains
modest due to continued downward credit rating migration in its
fixed-income securities portfolio and significant delinquencies in its
direct commercial mortgage loan portfolio.
While the group has recently increased its investment allocation to
investment grade corporate bonds, Liberty Bankersâ€™ exposure to real
estate-related investments remains elevated relative to other companies
with similar business profiles. A.M. Best remains particularly concerned
about the commercial real estate market going forward and believes
Liberty Bankers may experience further delinquencies and impairments in
its direct commercial loan portfolio. Any further investment impairments
would result in additional strain on the companyâ€™s risk-based capital
LBL, the flagship operating entity, is the groupâ€™s primary marketing arm
with over $185 million in direct premiums written in 2008. While LBL has
experienced strong growth in fixed annuity sales over the past few
years, the ordinary life line of business has grown only modestly and
has experienced lower persistency than expected. The group is focused on
expanding life insurance sales and improving persistency. Although LBL
has experienced favorable operating results in recent years, A.M. Best
believes the group will remain challenged to maintain a balance between
a prudent risk-adjusted capital position and its desire to build
LBLâ€™s key insurance subsidiary, American Benefit, has experienced an
increase in net premiums through its current reinsurance relationship in
which it assumes pre-need and whole life insurance policies. While the
company maintains a relatively strong risk-adjusted capital position,
its relatively low level of absolute capital and surplus leaves it
vulnerable to sizeable investment losses or earnings volatility.
However, the recent $1 million capital contribution from its parent has
somewhat mitigated this concern. A.M. Best will continue to monitor the
companyâ€™s capital position and progress in expanding its currently
limited business profile.
For Bestâ€™s Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including
any additional methodologies and factors that may have been considered,
can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit
rating organization dedicated to serving the financial and health care
service industries, including insurance companies, banks, hospitals and
health care system providers. For more information, visit www.ambest.com.
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Source: A.M. Best Co.