A.M. Best Assigns Ratings to Allstate Assurance Company
December 09 2014 - 2:42PM
Business Wire
A.M. Best has assigned a financial strength rating of A
(Excellent) and an issuer credit rating of “a+” to the Allstate
Assurance Company (AAC) (Northbrook, IL). AAC is a wholly-owned
subsidiary of the Allstate Life Insurance Company (ALIC), a
member of the Allstate Financial Companies (Allstate
Financial) that is ultimately owned by The Allstate
Corporation (Allcorp) [NYSE:ALL]. The outlook assigned to both
ratings is positive.
The assigned ratings reflect AAC’s developing business profile
and anticipated strategic value to Allstate Financial. The ratings
also reflect the strong brand name recognition and considerable
benefits derived from its affiliation with Allstate Insurance
Company (AIC) and its property/casualty affiliates (together,
Allstate) that market products using the Allstate brand, as well as
the implicit and expected explicit financial support of its
ultimate parent, Allcorp.
Beginning in 2015, it is anticipated that AAC will begin issuing
the majority of Allstate Financial’s new life insurance business
solely utilizing Allstate’s exclusive agencies, which are supported
by Allstate Financial’s exclusive financial specialists. AAC plans
to offer interest-sensitive and traditional life insurance products
including indexed and variable life insurance with an emphasis on
helping meet the life insurance protection needs of Allstate’s auto
and homeowner customers. A.M. Best notes that Allstate Financial
recently exited the independent agent channel and no longer issues
proprietary annuity products. Also in 2015, it is expected that
ALIC will reinsure seasoned blocks of interest-sensitive life
policies to AAC in order to provide AAC a stream of profits and a
sizeable initial asset portfolio. A subsidiary of Allcorp is also
expected to make an initial capital infusion to support the
reinsured businesses and the near-term anticipated new business
growth. Finally, the majority of new business issued by AAC is
expected to be reinsured to ALIC. All expected reinsurance
arrangements will be subject to normal regulatory approvals. Based
on a review of AAC’s financial plans, A.M. Best believes that
stand-alone risk-adjusted capitalization will be adequate to
support the company’s business and investment risks. In assigning a
positive outlook to AAC’s ratings, A.M. Best anticipates that over
the near-term, AAC is likely to qualify for the same level of
rating enhancement currently provided to the other Allstate
Financial companies.
A.M. Best notes that AAC’s insurance liabilities are not
expected to be guaranteed by Allcorp, AIC or ALIC, and a capital
support agreement has not been established. Additionally, A.M. Best
believes that AAC will be challenged to maintain statutory
profitability despite the stream of profits expected from its
assumption of the seasoned blocks of interest-sensitive life
business from ALIC. Expense strains anticipated from new business
growth coupled with potentially prolonged low interest rates may
hinder the rate of earnings growth. Finally, A.M. Best believes the
company may be challenged to maintain adequate risk-adjusted
capitalization to support its anticipated new business growth
without additional capital infusions.
Positive rating actions for AAC could result from positive
rating actions taken by A.M. Best on the ratings of Allcorp, AIC or
members of Allstate Financial. Positive rating actions could also
result if, in A.M. Best’s view, ACC meets the criteria for full
rating enhancement as outlined in Best’s “Rating Members of
Insurance Groups” criteria. Factors that could result in negative
rating actions include negative rating actions taken by A.M. Best
on Allcorp, AIC or members of Allstate Financial, a material change
in A.M. Best’s view of the strategic importance of AAC and/or
members of Allstate Financial to Allcorp, a significant and
sustained decline in AAC’s stand-alone risk-adjusted
capitalization, net operating performance that does not meet A.M.
Best’s expectations over an extended period of time, or if
meaningful top-line growth does not materialize.
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. Best’s
Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- A.M. Best’s Liquidity Model for U.S.
Life Insurers
- Rating Members of Insurance Groups
- Rating New Company Formations
- Risk Management and the Rating Process
For Insurance Companies
- Understanding BCAR for U.S. And
Canadian Life/Health Insurers
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 Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
A.M. BestSteven Faulks, 908-439-2200, ext. 5035Senior Financial
Analyststeven.faulks@ambest.comorThomas Rosendale, 908-439-2200,
ext. 5201Assistant Vice
Presidentthomas.rosendale@ambest.comorChristopher Sharkey,
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, 908-439-2200,
ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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