A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of Primerica Life Insurance Company (Primerica Life) and its affiliates, National Benefit Life Insurance Company and Primerica Life Insurance Company of Canada.
Primerica’s ratings recognise its status as one of the largest writers of term life insurance in the US, with its strong market position attributable to its dedicated distribution affiliate, Primerica Financial Services.
This integrated distribution and operating platform included approximately 95,400 life agents at the end of Q1 2014.
Primerica’s earnings also have been consistent with A.M. Best’s expectations, as the group recorded annual net income of $163 million for 2013.
A.M. Best views Primerica Life’s regulatory risked-adjusted capitalisation as favourable, in part supported by Peach Re, a special purpose domestic captive that funded Regulation XXX term life excess reserves in 2009 and new business issued in 2010.
While A.M. Best anticipates that risk-adjusted capitalisation will decline over the near-term as the anticipated capital benefits from additional excess reserve financing is expected to be offset by dividends to the holding company.
Longer-term, risk-adjusted capital ratios are expected to remain at a level commensurate with the current ratings.
A.M. Best also stated that these positive rating factors are offset by Primerica’s somewhat narrow business profile, aggressive capital management policy and reinsurance transactions that have diminished its absolute capital position and earnings power.
In addition, while A.M. Best expects the consolidated statutory earnings of the insurance operating companies to benefit from the use of captives to fund Regulation XXX reserves, statutory capital and earnings growth of the insurance operating companies will likely be constrained by continued dividend payments to Primerica.
