[November 15, 2012]

A.M. Best Affirms Ratings of Guardian Life Insurance Company of America and Its Subsidiaries

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 channels.

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 RESERVED.

[ Back To Insurance Technology's Homepage ]