OLDWICK, N.J., Oct 25, 2010 (BUSINESS WIRE) — A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and issuer credit rating to “a-” from “a” of Liberty Life Insurance Company (Liberty Life) (Greenville, S.C.). Both ratings remain under review with negative implications.
The rating actions follow the announcement that Athene Holding Ltd. has signed a definitive agreement to acquire Liberty Life from the Royal Bank of Canada (RBC) for a purchase price of $628.1 million. As part of this transaction, substantially all of the life/health business of Liberty Life will be coinsured to Protective Life Insurance Company, and a portion of Liberty Life’s annuities will be coinsured to Athene Life Re Ltd., a Bermuda-domiciled subsidiary of Athene Holding Ltd.
Given the announcement of the sale, A.M. Best is no longer affording ratings enhancement to the ratings of Liberty Life from RBC. Liberty Life had historically represented the U.S. life insurance and annuity operations of RBC. The ratings of Liberty Life were placed under review with negative implications on September 7, 2010, when RBC announced that it was reviewing all “strategic options” for its U.S. insurance business. Liberty Life’s ratings had previously recognized the financial strength and historical support of RBC, as demonstrated by the capital support received in 2009 of $50 million to fund fixed annuity growth and offset realized investment losses.
The ratings of Liberty Life will remain under review with negative implications given that the future financial flexibility and strategic direction of the company is unclear at this time. In addition, with the reinsurance of the life/health insurance business, the company’s reserve base will be increasingly interest-sensitive and less diversified. A.M. Best anticipates resolving Liberty Life’s under review status following further discussions with the new ownership and required regulatory approvals. This transaction is expected to close in early 2011.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology — Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include “Rating Members of Insurance Groups.” Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
SOURCE: A.M. Best Company
A.M. Best Company
Kenneth Monahan, 908-439-2200, ext. 5342
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Richard McMillan, 908-439-2200, ext. 5615
Managing Senior Financial Analyst
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
- RBC selling U.S. life insurance unit (theglobeandmail.com)
- Protective Life to Enter Coinsurance Agreement with Liberty Life (eon.businesswire.com)