|[October 28, 2013]
A.M. Best Affirms Ratings of Symetra Financial Corporation and Its Subsidiaries
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating of A
(Excellent) and issuer credit ratings (ICR) of "a+" of Symetra Life
Insurance Company and its subsidiary, First Symetra National Life
Insurance Company of New York (New York, NY). Concurrently, A.M.
Best has affirmed the ICR of "bbb+" and existing debt ratings of the
enterprise's ultimate holding company, Symetra Financial Corporation
(Symetra) (NYSE:SYA). The outlook for all ratings is stable. All
companies are headquartered in Bellevue, WA, unless otherwise specified.
The ratings reflect Symetra's balanced product mix, good earnings
diversification, sound risk-adjusted capitalization and strong overall
balance sheet. Symetra's insurance operations continue to generate solid
operating earnings across all business divisions. Although there has
been some recent earnings pressure within some of its core lines of
business, each segment currently comprises at least one-fifth of
Symetra's total pre-tax adjusted operating earnings. As a result of the
group's consistent operating earnings, Symetra's risk-adjusted capital
remains strong. The organization continues to look to enhance future
earnings and revenue streams through both broadening its product
portfolio and expanding its distribution.
The ratings also reflect Symetra's conservative financial leverage ratio
of approximately 14%-incorporating some equity credit for hybrid
securities-and strong interest coverage of over eight times, both
well within A.M. Best's guidelines for the company's current ratings.
Additionally, A.M. Best's expectations for future growth in both
earnings and equity should enable the company to maintain its favorable
While Symetra continues to report favorable overall earnings trends,
some of its business segments have produced weaker pre-tax adjusted
operating income through the first half of 2013. The company has
generated lower earnings within its individual life and retirement
business segments due to declining premium revenue and higher claims
experience. Consistent with some of the organization's competitors,
persistent low interest rates have depressed annuity sales over the past
couple of years. The sales decline in income annuities also can be
attributable to Symetra discontinuing sales of structured settlements at
the end of 2012. However, a more favorable interest rate environment,
combined with Symetra's ongoing expansion of bank distribution, has led
to a sizeable increase in deferred annuity sales in the third quarter of
2013, led by fixed indexed annuities. A.M. Best notes that despite the
sluggish economy, Symetra has generally maintained its targeted spreads
and has been reporting favorable persistency within its annuity segments.
Symetra maintains a leadership position in medical stop-loss and is an
established provider of annuities through banks and broker-dealers.
Although the organization's business profile continues to strengthen,
A.M. Best remains concerned regarding the sustainability of earnings
across key product lines given the persistent low interest rate
environment and the possibility of lower net investment income. However,
A.M. Best believes that Symetra's strong capital position and
high-quality investment portfolio partially mitigate the potential
degradation in operating performance should low interest rates persist.
A.M. Best believes Symetra is well positioned at its current rating
level over the near to medium term.
Factors that could lead to negative rating actions include a significant
deterioration in the company's operating performance, the need for
material reserve adjustments or sizable realized investment losses.
The following debt ratings have been affirmed:
Symetra Financial Corporation-
-- "bbb+" on $300 million 6.125% senior unsecured notes, due 2016
-- "bbb-" on $150 million fixed-to-floating rate junior subordinated
notes, due 2067
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. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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