A.M. Best Upgrades Ratings of Foresters Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and issuer credit rating (ICR) to “a” from “a-” of Foresters Life Insurance Company(Foresters Life) (Mississauga, ON). Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICR of “a+” of The Independent Order of Foresters (Foresters) (Toronto, ON). A.M. Best also has affirmed the FSR of A- (Excellent) and (ICR of “a-” of First Investors Life Insurance Company (FIL) (New York, NY). The outlook for all ratings is stable.

Foresters’ ratings reflect its long-established fraternal and insurance presence in the Canadian and U.S. marketplace, its strong risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio and positive operating results, despite the continued low interest rate environment. Foresters has a strong affinity with its membership base through its charitable programs and competitive portfolio of life insurance and annuity products.

Partially offsetting these positive rating factors are Foresters’ top-line challenges to organically sustain new membership growth, its strained operating earnings in the United States market due to low interest rates and the challenges in the competitive Canadian marketplace.

The upgrading of the ratings for Foresters Life reflects the enhanced importance the company has to Foresters. This is demonstrated by the increased marketing and expense synergies that Foresters Life has with Foresters and its role in increasing the group’s revenue contribution from the Canadian market. Foresters Life continues to be positioned as the strategic marketing arm for Foresters’ life insurance operations in Canada following its acquisition in 2008. In January 2012, the company’s name was changed from Unity Life to Foresters Life in order to leverage the marketing and branding strength of its parent. Going forward, A.M. Best expects Foresters Life to continue to benefit from the financial strength and implied support of Foresters’ fraternal organization.

Partially offsetting these positive rating factors are the challenges Foresters Life faces in organically growing premium due to the competitive Canadian insurance marketplace and the current low interest rates, which have decreased earnings for the year.

FIL is a recently acquired life subsidiary under Foresters, which markets life insurance and variable and fixed annuities in the United States. FIL enables Foresters to benefit from both product and geographic diversification. FIL operates as a stand-alone entity in the Foresters’ U.S. division.

These favorable rating factors are partially offset by Foresters’ relative inexperience in owning a variable product issuer and the challenges associated with managing a privately held entity in a fraternal structure and culture.

A.M. Best believes that Foresters is well positioned at its current rating level. Key rating drivers that may lead to negative rating actions include sustained deterioration in the company’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”; “Rating Members of Insurance Groups”; 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 Co.
Eva Sverdlova
Financial Analyst
(908) 439-2200, ext. 5733
eva.sverdlova@ambest.com
or
Richard McMillan
Assistant Vice President
(908) 439-2200, ext. 5615
richard.mcmillan@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

Source: A.M. Best Co.