AM Best affirms ratings of Wilton Re and subsidiaries

AM Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of Wilton Re and several of its subsidiaries.

The companies involved are Wilton Reinsurance Bermuda, Wilton Reassurance Company, Texas Life Insurance Company, Wilton Reassurance Life Company of New York, Wilcac Life Insurance Company and Wilco Life Insurance Company, collectively referred to as Wilton Re.

AM Best also has affirmed the Long-Term ICRs of “a-” of Wilton Re and Wilton Re Finance, as well as the Long-Term Issue Credit Rating of “a-” on the $300 million 5.875 percent senior unsecured notes due 2033 of Wilton Re Finance. The notes are unconditionally guaranteed by its parent companies, Wilton Re US Holdings, and Wilton Re. AM Best notes that Wilton Re’s adjusted financial leverage and interest coverage are within AM Best’s expectation.

Additionally, AM Best has upgraded the FSR to A+ (Superior) from A (Excellent) and the Long-Term ICR to “aa-” from “a” of ivari. This upgrade reflects AM Best’s view that ivari has become a strategic part of Wilton Re's current and future business strategies, contributing a significant portion of the group's earnings.

The outlook of all these credit ratings is stable.

AM Best said that the ratings reflect Wilton Re’s very strong balance sheet strength, as well as strong operating performance, favourable business profile and appropriate enterprise risk management.

The ratings also reflect Wilton Re’s solid risk-adjusted capitalisation level, disciplined growth strategy, and high-quality balance sheet and stable liability structure, which are focused principally on mortality risk. The ratings also recognise the ongoing commitment by the company’s ultimate parent, Canada Pension Plan Investment Board (CPPIB), to provide capital to Wilton Re in support of future growth.

While Wilton Re’s operations generate significant capital, which can be deployed to fund growth, AM Best believes that CPPIB would provide additional funding, if needed. Wilton Re’s continued strategy of closed block acquisitions is viewed positively, as it enhances the embedded value of the organisation, and its future earnings and capital generation capabilities.

Partially offsetting these positive rating attributes is the impact of the continued low interest rate environment, which has modestly affected earnings on fixed income investments. Operating results trends also have been dampened recently by adverse mortality trends for the industry and a recent deferred acquisition cost unlocking. Other offsetting rating factors include potential execution risks and competition associated with acquiring larger blocks of business.