A.M. Best Affirms Ratings of Knights of Columbus

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) and issuer credit rating of “aa+” of Knights of Columbus (the Order) (New Haven, CT). The outlook for both ratings is stable.

The ratings of the Order reflect its strong fraternal and insurance presence within the Catholic communities in the United States and Canada, its strong risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio and its consistently positive statutory operating results. The Order’s aggregate statutory operating performance is favorable, with the majority of earnings generated from its core ordinary life segment, which is enhanced by favorable persistency due in part to the loyal nature of the Order’s members and improved agent productivity. The Order has a strong affinity with its large membership base through its charitable programs and competitive portfolio of life insurance and annuity products.

Somewhat offsetting these strengths are the challenges the Order faces in the low interest rate environment, which has caused a duration mismatch in asset liability management and a decrease in its risk-based capitalization. The Order also has a modest exposure to residential and commercial mortgage-backed securities, including 2006 and 2007 vintage Alt-A securities that are currently in an unrealized loss position. A.M. Best notes that the Order’s insurance membership growth has been modest relative to its overall membership base and resources. The increasing competition from large commercial life insurers and the Order’s limited distribution channels may be viewed as limiting factors in achieving higher insurance growth on a consistent basis. Nonetheless, A.M. Best believes the Order enjoys a formidable competitive position relative to other Catholic-based fraternal societies in the United States and Canada.

A.M. Best believes that the Knights of Columbus is well positioned at its current rating level. Key rating drivers that may lead to negative rating actions include sustained deterioration in the Order’s operating performance, capital erosion due to investment losses or heightened risk appetite.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies” and “Understanding BCAR for Life/Health Insurers.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Company
Edward Kohlberg, 908-439-2200, ext. 5664
Financial Analyst
[email protected]
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
or
William Pargeans, 908-439-2200, ext. 5359
Assistant Vice President
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company