A.M. Best Affirms Ratings of Guggenheim Life and Annuity Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of Guggenheim Life and Annuity Company (GLAC) (Wilmington, DE). The outlook for both ratings is stable.

The ratings reflect GLAC’s strong operating performance, adequate level of risk-adjusted capitalization and historical level of capital support from its parent. Operating performance continues to benefit from relatively stable investment spreads and a portfolio yield that is currently above the industry average and A.M. Best benchmarks. Finally, GLAC’s business profile, although niche and concentrated in interest-sensitive lines, is diversified from a distribution standpoint with direct retail, assumed reinsurance and private placement channels. A.M. Best also notes the addition of retail fixed indexed annuities to GLAC’s direct product profile is viewed by A.M. Best to be at the lower range of A.M. Best’s high risk product scale.

Partially offsetting rating factors include a high proportion of bonds classified as Level III assets due to elevated allocations to structured securities and a sizeable portfolio of short-term Schedule DA assets and other invested assets. In A.M. Best’s opinion, concentration in these asset classes, while resulting in a strong portfolio yield, has contributed to a higher-than-average investment risk profile and lower portfolio liquidity. However, these concerns are partially mitigated by a thorough underwriting and monitoring enterprise risk management process with good performance to date, albeit partially reflective of the benign credit environment. Other rating factors include relatively flat levels of risk-adjusted capital, high use of reinsurance and challenges in diversifying its business profile, as nearly all of GLAC’s general account liabilities are interest-sensitive.

Factors that could lead to a positive ration action include organic growth in risk-adjusted capital and a reduction in overall investment risk as measured by a reduction in investments classified as Level III. Additionally, improved diversification in GLAC’s business profile with a reduction in interest-sensitive liabilities could lead to a positive rating action. Factors that could lead to a negative rating action include a substantial decline in risk-adjusted capitalization due to operating losses, dividends or large credit impairments. Additionally, higher allocations of relatively less liquid and potentially more risky asset types including an increase in Level III assets and declining sales trends could lead to a negative rating action.

This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.

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

Copyright © 2016 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160108005789/en/

A.M. Best

Frank Walko, 908-439-2200, ext. 5072

Financial Analyst

[email protected]

or

Rosemarie Mirabella, 908-439-2200, ext. 5892

Assistant Vice President

[email protected]

or

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

Manager, Public Relations

[email protected]

or

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

Assistant Vice President, Public Relations

[email protected]

Source: A.M. Best Company, Inc.