Fitch Affirms StanCorp Financial Group’s Ratings; Outlook Stable
Proquest LLC |
The following is from Fitch Ratings on
Fitch Ratings has affirmed the Issuer Default Rating (IDR) of
The Rating Outlook is Stable. A full list of rating actions follows at the end of this release.
KEY RATING DRIVERS
Today's affirmation reflects SFG's improved operating performance in 2013, good competitive position in the group life and disability market, strong capitalization and improved financial leverage. The company's ratings also reflect continued challenges in terms of its overall operating profitability in a very competitive market environment, with persistently low market interest rates and poor economic conditions, which has resulted in slow employment growth and adverse claims experience in recent years.
SFG's operating performance improved significantly in 2013 after several years of declining performance driven by an intense competitive environment and poor economic conditions. SFG reported pretax operating income of
SFG's statutory total adjusted capital increased 8 percent in 2013 to
SFG's ratings are supported by the company's solid balance sheet fundamentals and solid competitive position in the U.S. group insurance market. The company's balance sheet fundamentals reflect strong asset quality, good risk adjusted capitalization, and reasonable financial leverage. SFG's total financing and commitments ratio was approximately 0.3 times (x) and financial leverage was 20 percent at
Fitch believes that SFG's insurance subsidiaries maintain a high- quality bond portfolio. Below investment grade (BIG) bonds accounted for only 6 percent of the fixed maturity portfolio or a low 29 percent of total adjusted capital (TAC) at
While SFG's commercial mortgage portfolio allocation of approximately 43 percent of total statutory invested assets at
RATING SENSITIVITIES
The key rating triggers that could result in an upgrade include:
--A substantial increase in run-rate risk-adjusted capital above 350 percent, with no significant deterioration in capital quality;
--A long-term improving trend in the group benefit ratio substantially below its historic baseline of about 76 percent.
The key rating triggers that could result in a downgrade include:
--A prolonged deterioration in the company's group benefit ratio above the 2011 level of 83 percent;
--An increase in financial leverage above 30 percent;
--GAAP-based interest coverage below 6x for an extended period of time;
--A decrease in RBC below 300 percent, or a significant decrease in the quality of capital supporting the company's RBC;
--A significant deterioration in the performance of the company's commercial mortgage loan portfolio.
Fitch affirms the following ratings with a Stable Outlook:
--IDR at 'BBB+';
--
--60-year
--IFS rating at 'A'.
--IFS rating at 'A'.
Additional information is available at 'fitchratings.com'.
--'Insurance Rating Methodology' (
--'Life Insurance (U.S.) Sector Credit Factors' (
Insurance Rating Methodology
http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=723072
Life Insurance (U.S.) Sector Credit Factors
http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=686297
Additional Disclosure
Solicitation Status
http://fitchratings.com/gws/en/disclosure/ solicitation?pr_id=861914
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