KEY RATING DRIVERS
Symetra's ratings reflect its strong balance sheet, diversified earnings, moderate financial leverage. Additional strengths include the company's strong competitive position in the group medical stop-loss market and fixed annuities sold through banks. The ratings also reflect its above-average interest rate risk.
The ratings consider Symetra's status as a wholly-owned subsidiary of
Based on Fitch's criteria, Symetra's strategic importance level is 'Very Important' within the Sumitomo enterprise, reflecting its position as its parent's
The standalone credit profile also considers Symetra's exposure to the protracted low interest rate environment. Fitch believes that with its liability mix, particularly its large legacy structured settlement and bank owned life insurance book, Symetra is more exposed to interest rate risk than peers.
Fitch views Symetra Life's risk-adjusted capital as strong for the rating and considers the growth in statutory surplus adequate. The company's RBC ratio decreased in 1H16 to an estimated 411% from 424% as of year-end 2015. However, RBC remains both strong for the rating level and above management's target of 350%. Symetra's Prism capital model score in 2015 was 'Strong', which is consistent with the rating level.
Symetra's financial leverage declined to 16% as of
Symetra's risky asset ratio of 71% remained below the industry (80%) at year-end 2015, due to its below-average Schedule BA exposure, which is partially offset by its above-average common stock exposure. The company's bond portfolio is overweight 'BBB' rated bonds, but its exposure to below investment grade bonds is in line with the industry. Commercial mortgages comprise 16% of its invested assets, moderately above the industry's 11%, but the portfolio is of high quality and considered a good match for its long-dated liabilities.
Symetra Life's IFS rating could be upgraded one notch above Sumitomo's IFS rating if its standalone credit profile improved to 'A+'. As a 'Very Important' subsidiary of Sumitomo, Symetra Life's IFS rating could also be upgraded in conjunction with an upgrade of the parent. Given that Sumitomo's ratings have a Negative Outlook, an upgrade of Symetra Life for this reason is unlikely in the near term. In the event of a one notch downgrade of the parent's IFS rating to 'A-', Symetra Life could maintain its current 'A' IFS rating per Fitch's criteria. As a 'Very Important' subsidiary of Sumitomo, Symetra Life's IFS rating could be downgraded below the parent's IFS rating if its standalone assessment is downgraded by three or more notches.
Symetra's holding company ratings are somewhat constrained by Sumitomo's ratings, which are capped by
FULL LIST OF RATING ACTIONS
Fitch has affirmed the following ratings with a Stable Outlook:
--IDR at 'A-';
--4.25% senior unsecured notes due
--8.3% junior subordinated CENts due
--IFS at 'A'.
--IFS at 'A'.
Additional information is available on www.fitchratings.com
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Source: Fitch Ratings