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TMCNet:  A.M. Best Affirms Credit Ratings of Legal & General Group Plc's U.S. Operations

[November 10, 2017]

A.M. Best Affirms Credit Ratings of Legal & General Group Plc's U.S. Operations

A.M. Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of "aa-" of Banner Life Insurance Company (Banner Life) (Frederick, MD) and William Penn Life Insurance Company of New York (William Penn) (Valley Stream, NY). Banner Life and William Penn are collectively referred to as the Legal & General America Group (LGA) and represent the U.S. operations of the ultimate parent, Legal & General Group Plc (L&G), a worldwide insurance organization headquartered in the U.K. The outlook of these Credit Ratings (ratings) is stable.

The rating affirmations reflect LGA's strong competitive position in the U.S. term life marketplace, where it consistently ranks in the top 10 for term life annualized new business premiums. The ratings also reflect LGA's solid operating performance, as measured on a U.S. GAAP and International Financial Reporting Standard basis, which has been enhanced by LGA's efficient expense structure, variable cost distribution network strategy and disciplined approach to mortality underwriting. LGA maintains solid risk-adjusted capitalization that has been underpinned by a high-quality, long-term bond portfolio. A.M. Best also recognizes LGA's strategic importance to L&G, which has provided explicit support when needed to sustain LGA's new business growth.

While positive rating factors reflect LGA's strong term life market position and its strategic importance to the parent, LGA's business profile remains narrow and heavily dependent upon the highly competitive, lower-margin commoditized term life market. A.M. Best also expects LGA to experience volatility in its tatutory accounting results due to high levels of statutory expense strain anticipated from new business production and the effects of periodic reserve financing transactions. Additionally, over the past few years, LGA implemented a strategic asset allocation program whereby the group reduced its allocation to publicly issued investment grade bonds and increased its allocations to high-yield and non-144A private placement bonds and direct commercial mortgage loans. While A.M. Best expects these asset classes to increase the overall yield of the invested asset portfolio and improve asset-liability duration matching, these assets classes are less liquid and expose the group to potential asset impairments.

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.


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