A.M. Best Places Ratings of Lincoln Benefit Life Company Under Review With Negative Implications
July 19, 2013 by N/A
FOR IMMEDIATE RELEASE / OLDWICK, N.J., JULY 19, 2013
A.M. Best Co. has placed under review with negative implications the financial strength rating of A+ (Superior) and issuer credit rating of “aa-” of Lincoln Benefit Life Company (LBL) (headquartered in Northbrook, IL) following The Allstate Corporation’s (Allstate) (Northbrook, IL) [NYSE: ALL] announcement of a definitive agreement to sell LBL to Resolution Life Holdings, Inc. (Resolution Life) for $600 million. Historically, LBL has operated as Allstate Financial’s independent agent marketing arm offering an array of life insurance and annuity products and reinsuring the vast majority of the business to Allstate Life Insurance Company (ALIC) (Northbrook, IL).
The rating actions reflect A.M. Best’s prospective view that LBL will lose the benefits derived from being affiliated with Allstate—that is, the financial, reinsurance and operational support the policyholders have historically received. The loss of these benefits could also impact the persistency of the business being acquired by Resolution Life. The under review status also reflects the uncertainty surrounding LBL’s potential new owner as A.M. Best has not had any conversations with Resolution Life’s management regarding its business strategy and ability to maintain adequate levels of capital at LBL to support its current ratings. Furthermore, it is A.M. Best’s understanding that Resolution Life is not rated by any other nationally recognized statistical rating organization. The ratings of ALIC and its other key life/health affiliates—Allstate Life Insurance Company of New York and American Heritage Life Insurance Company—are unaffected by this transaction.
A.M. Best expects to resolve the under review status upon completion of the transaction, following discussions with Resolution Life’s management. Given that Resolution Life is unlikely to be in the position to afford the same level of rating enhancement to LBL (currently provided by Allstate under Best’s Credit Rating Methodology), A.M. Best anticipates that there is a significant likelihood of material rating downgrades once the acquisition closes.
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.Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.
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Steven Faulks Senior Financial Analyst (908) 439-2200, ext. 5035 steven.faulks@ambest.com
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Rachelle Morrow Senior Manager, Public Relations (908) 439-2200, ext. 5378 rachelle.morrow@ambest.com
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