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 the primary life insurance subsidiaries of Protective Life Corporation (headquartered in Birmingham, AL), collectively known as Protective Life. Additionally, AM Best has affirmed the Long-Term ICR of a- and the existing Long-Term Issue Credit Ratings (Long-Term IR) of Protective Life Corporation. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of these subsidiaries and ratings.)
The ratings reflect Protective Lifes balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
The ratings of Protective Life and its life subsidiaries continue to reflect its strong risk-adjusted capitalization, and diversified and generally favorable operating results. Protective Life has a well-established core competency as an acquirer of life and annuity blocks of business and legal entities, which have contributed to earnings growth and allowed it to realize scale-related operating efficiencies. While Protective Lifes balance sheet has equity and interest rate risk embedded in its variable annuity book, it benefits from a comprehensive hedging program that has reduced the net amount at risk due to strong equity market performance in recent years.
These strengths are offset partially by volatile statutory operating earnings and downward pressure on risk-adjusted capital as a result of its acquisition strategy. Protective Lifes operating returns and risk-adjusted capital also benefit from significant utilization of captive solutions for XXX and AXXX reserves on a statutory basis, which qualitatively diminishes reported capitalization ratios. Protective Life also maintains a relatively high level of real estate-related investments in its portfolio relative to its capital and surplus although it continues to perform well. AM Best believes the companys strong and consistent operating cash flows, liquidity resources and financial flexibility partially have mitigated any concern regarding these investments.
The FSR of A+ (Superior) and the Long-Term ICRs of aa– have been affirmed with a stable outlook for the following primary life insurance subsidiaries of Protective Life Corporation:
- Protective Life Insurance Company
- Protective Life and Annuity Insurance Company
- West Coast Life Insurance Company
- MONY Life Insurance Company
The following Long-Term IRs have been affirmed with a stable outlook:
Protective Life Corporation
— a- on $400 million 7.375% senior unsecured notes, due 2019 — a- on $300 million 8.45% senior unsecured notes, due 2039
Protective Life Global Funding aa- program rating
— aa- on all outstanding notes issued under the program
AM Best has withdrawn the following indicative Long-Term IRs on securities available under the shelf registration:
PLC Capital Trust VI, VII and VIII
— bbb on preferred securities
This press release relates to Credit Ratings that have been published on AM Bests 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 AM Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
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