Bermuda-based life reinsurer’s rating affirmed

Bermuda-based Kuvare Life Re has had its financial strength rating affirmed by ratings agency AM Best, but the agency has downgraded an affiliated US-based company.

The ratings agency affirmed Kuvare’s  A- FSR, and said this was due to its very strong balance sheet as well as its adequate operating performance, neutral business profile and appropriate ERM.

But the agency downgraded the FSR of Illinois-headquartered Lincoln Benefit Life Company from A- to BBB+, saying its reflected its strong balance sheet, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

“The revised outlooks for LBL’s ratings recognise the continued capital support required for its captive reinsurer, Lancaster Re Captive Insurance Company, and resulting impacts that is expected to have on LBL’s capital flexibility moving forward,” AM Best said. “The deterioration in the company’s capital trends is due to underperformance in its runoff universal life with secondary guarantees (ULSG) business beyond initial projections.

“Mitigating factors include the company’s growth through funding agreement issuances and assuming reinsurance of third-party liabilities, as well as the expectation for profitability as the ULSG business approaches its peak reserve in the coming years.”

The outlook for the company was also revised from stable to negative.

AM Best affirmed the FSR of A- of Guaranty Income Life Insurance Company, headquartered in Baton Rouge, Louisiana, and United Life Insurance Company (Cedar Rapids, Iowa). The companies trade as part of the Guaranty Income Life Insurance Group.