A.M. Best Affirms Credit Ratings of Protective Life Corporation and Its Key Subsidiaries

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of the primary life insurance subsidiaries of Protective Life Corporation (Protective) (headquartered in Birmingham, AL). Additionally, A.M. Best has affirmed the Long-Term ICR of “a-” and the existing Long-Term Issue Credit Ratings (Long-Term IR) of Protective. The outlook of these Credit Ratings (ratings) is stable.

A.M. Best also has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Protective Property & Casualty Insurance Company. The outlook of these ratings remains stable.

The ratings reflect the company’s adequate balance sheet strength, profitable earnings and the implied support of its ultimate parent, Dai-ichi Life Holdings, Inc., whose largest subsidiary is The Dai-ichi Life Insurance Company, Limited (DL). The ratings of Protective and its life subsidiaries continue to reflect its strong risk-adjusted capitalization, diversified and generally favorable operating results, and history of effectively acquiring and integrating insurance companies and blocks of business and manageable dividend requirements. Additionally, A.M. Best notes that the group’s business mix has good diversification with an emphasis on life, annuities, and a core competency as an acquirer of life and annuity blocks of business and/or legal entities. Historically, the organization’s acquisition strategy has contributed to meaningful growth in earnings while allowing it to enter new markets and realize scale-related operating efficiencies. The ratings also reflect DL’s association with Protective, which provides it additional financial flexibility, and recognizes its leading market position as a global insurer, strong capitalization and diversified business profile.

These strengths are offset partially by a declining premium trend, and a business model that has employed funding solutions to fund Regulation XXX and Guideline AXXX (AG38/AG48) reserves in order to mitigate capital strain, which qualitatively impacts reported levels of risk-adjusted capitalization. Although Protective maintains above-average financial and operating leverage when compared with similarly rated companies, metrics remain within the guidelines for its ratings. A.M. Best believes the company’s strong and consistent operating cash flows, liquidity resources and financial flexibility partially have mitigated this concern. Moreover, A.M. Best believes Protective’s financial flexibility is enhanced by DL’s strong risk-adjusted capitalization and diversified business profile. Protective also maintains a relatively high level of real estate-related investments in its portfolio relative to its capital and surplus. Partially mitigating this concern is that the direct commercial mortgage portfolio has performed well with no significant impairments or delinquencies, and the overall exposure to real-estates related investments have declined in recent years.

A.M. Best believes that the potential for a positive rating could occur if there is a positive rating action being taken on DL. Conversely, a negative rating action could occur if there is a negative rating action taken on DL or there is a significant decrease in Protective’s risk-adjusted capitalization due to new dividend requirements or investment impairments. Additionally, a negative rating action could occur if Protective has a material increase in total leverage.

For a complete listing of Protective Life Corporation and its subsidiaries' FSRs, Long-Term ICRs and Long-Term IRs, please visit Protective Life Corporation.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

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

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A.M. Best

Tom Zitelli, +1 908-439-2200, ext. 5412

Associate Director—L/H

[email protected]

or

Edward Zonenberg, FCAS, MAAA, +1 908-439-2200, ext. 5135

Senior Financial Analyst—P/C

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or

Christopher Sharkey, +1 908-439-2200, ext. 5159

Manager, Public Relations

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or

Jim Peavy, +1 908-439-2200, ext. 5644

Director, Public Relations

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