A.M. Best Affirms Ratings of Trans World Assurance Company
February 11 2016 - 10:58AM
Business Wire
A.M. Best has affirmed the financial strength rating
(FSR) of B++ (Good) and the issuer credit rating (ICR) of “bbb” of
Trans World Assurance Company (TWA) (San Mateo, CA). The
outlook for both ratings remains stable.
The ratings affirmation reflects TWA’s strong risk-adjusted
capitalization, overall positive statutory net earnings in recent
years, growth in capital and a high credit quality fixed income
portfolio with minimal below investment grade bond exposure and
favorable liquidity ratios.
Partially offsetting rating factors are ongoing regulatory
obstacles that are negatively impacting the marketing of the
company’s products on military bases, which has contributed to
declining premium trends in recent years and a diminished business
profile. Operating earnings continue to be pressured by low
interest rates and generous policyholder crediting rates. Despite
the lower levels of new business strain and recent shifts in the
investment portfolio to improve the portfolio yield, A.M. Best
believes that earnings will continue to be pressured. TWA’s
operating profile is highly interest rate sensitive and at risk of
spread compression in the low interest rate environment given very
high minimum guaranteed crediting rates on the majority of its
annuity and side-fund deposits. Additionally, the investment
portfolio holds a material allocation to affiliated holdings
(mortgage loans and real estate) that are geographically
concentrated and partially offset the company’s generally good
liquidity profile.
Key rating factors that could result in a positive rating action
include several years of sustained growth in premium levels and
inforce business metrics, increasing spreads between interest
earned on investments and interest credited to policyholders and
improved cash flow testing/asset adequacy results. Key rating
factors that could result in a negative rating action include a
continued decline in premiums written, decreases in risk-adjusted
capitalization, unfavorable performance within the mortgage
portfolio causing material realized losses and a decline in cash
flow testing/asset adequacy results.
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 see A.M.
Best’s Recent Rating Activity web page.
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. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20160211006103/en/
A.M. Best Company, Inc.Steve Vincent, 908-439-2200,
ext. 5802Senior Financial
Analyststeve.vincent@ambest.comorRosemarie Mirabella,
908-439-2200, ext. 5892Assistant Vice
Presidentrosemarie.mirabella@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