The ratings reflect Jefferson National's improved capitalization, positive growth trends and recent operating profitability. A management buyout of Jefferson National's parent, which included the addition of new private equity and family office investors, led to
Jefferson National has experienced sales growth for its product, Monument Advisor, a no commission flat insurance fee variable annuity focused on tax-deferred investing instead of guaranteed benefits, which is designed for the registered investment advisor and fee-based advisor markets. The company has recorded net operating income due to increased fee income, cost cutting initiatives and a scalable technology platform.
Offsetting rating factors include the company's monoline business profile, its exposure to Guaranteed Minimum Death Benefits (GMDB) on its legacy variable annuity blocks of business and the challenges of building scale in its operations. Jefferson National's sales and earnings growth remain exposed to equity markets.
Factors that may place downward pressure on the ratings include an erosion in capital due to unprofitable operations and/or other than temporary impairments; a sudden decrease in equity markets, which may increase reinsurance expenses for its GMDB and less than expected earnings due to lower future sales volume of Monument Advisor.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of
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