|[November 15, 2012]
A.M. Best Affirms Ratings of Guardian Life Insurance Company of America and Its Subsidiaries
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A++ (Superior) and issuer credit ratings (ICR) of "aa+" of Guardian
Life Insurance Company of America (Guardian Life) (New York, NY) and
its subsidiaries, Guardian Insurance & Annuity Company, Inc.
(Wilmington, DE) and Berkshire Life Insurance Company of America
(Pittsfield, MA) (together referred to as Guardian). Concurrently, A.M.
Best has affirmed the debt rating of "aa-" on the $400 million 7.375%
surplus note due September 30, 2039 of Guardian Life.
Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICRs
of "a" of Family Service Life Insurance Company, Sentinel
American Life Insurance Company (both domiciled in Texas) and Park
Avenue Life Insurance Company (Delaware). A.M. Best also has
affirmed the FSR of A (Excellent) and ICR of "a+" of First
Commonwealth Insurance Company (Chicago, IL). These companies also
are subsidiaries of Guardian Life. The outlook for all ratings is stable.
The ratings of Guardian reflect its superior capitalization and positive
premium trends generated from its core individual, group and asset based
business segments despite continued challenging economic condition.
Guardian's consistent earnings and diversified business mix provide a
stable stream of earnings and cash flow. Additionally, Guardian has
executed a number of de-risking initiatives to counteract the low
interest rate environment; it maintains an active credit risk management
program and continues to focus on strengthening its distribution
Offsetting rating factors include the potential challenge for premium
growth in Guardian's core life and group benefit segments due to the
highly competitive marketplace. A.M. Best notes an increasing number of
companies shifting away from interest-sensitive business lines while
emphasizing mortality and morbidity risk. Given prolonged low interest
rates, A.M. Best expects continued pressure on investment spreads. While
Guardian maintains a conservative investment portfolio relative to its
peers, the company has some exposure to real estate-linked assets;
however, its position has been moderately declining relative to surplus
in recent years.
The Guardian companies are well positioned at their current ratings.
Negative rating actions could occur if capitalization, operating
performance or both fall markedly short of A.M. Best's expectations.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include:
"Understanding BCAR for Life/Health Insurers" and "Risk Management and
the Rating Process for Insurance Companies." Best's Credit Rating
Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS
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