A.M. Best has affirmed the long-term issuer credit rating of “a” on the $800 million floating rate insured notes due 2037 issued by Northwind Holdings, a Delaware limited liability company and wholly-owned subsidiary of Unum Group. The outlook of the long-term is stable.
Northwind Holdings was formed for the limited purpose of holding the stock of Northwind Reinsurance Company, issuing the notes and engaging in activities incidental to its duties.
Domiciled in Vermont, Northwind Holdings is the sole shareholder of Northwind Re, a special purpose financial captive insurance company.
Northwind Re was established to provide reinsurance coverage to three of Unum’s subsidiaries, Provident Life and Accident Insurance Company, The Paul Revere Life Insurance Company and Unum Life Insurance Company of America, as well as to facilitate the funding of a portion of the capital required to support a closed block of individual disability income policies.
The long-term affirmation takes into consideration Unum’s operating subsidiaries’ current financial strength rating of A (Excellent) and long-term issuer credit ratings of “a”; the adequacy of cash flows from Northwind Re available to be transferred as dividends to Northwind Holdings.
A.M. Best suggested that Northwind Holdings’ long-term and outlook may come under negative pressure if, cash flows to service the note obligations become insufficient, the credit rating of Unum Group deteriorates, the coverage ratio of the reserves and surplus to policy benefits deteriorates, actual operating performance fails to meet certain benchmarks, or if performance of its investment portfolio deteriorates.
The rating company added that the long-term issuer credit rating and its outlook could benefit if a favourable trend occurs in the aforementioned categories.