A.M. Best Affirms Ratings of Symetra Financial Corporation and its Subsidiaries
November 23, 2015 by AM Best
Oldwick – A.M. Best has affirmed the financial strength rating of A (Excellent) and the 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 issue ratings ofSymetra 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 trend of favorable operating earnings in its business segments, and solid liquidity and risk-adjusted capitalization. Symetra reported good operating results through the first three quarters of 2015, although slightly lower than the prior year due in part to volatile mortality experience and the macroeconomic environment. Results were bolstered by year-over-year sales growth in all core product segments, and pre-tax operating income was favorable to prior year in the company’s deferred annuities business within the Retirement Division. The annuity business benefited from a favorable unlocking adjustment in the third quarter of 2015. The company’s Benefits Division, which is primarily medical stop-loss business, reported a loss ratio that was favorable to the company’s target range.
The ratings also reflect Symetra’s conservative adjusted financial leverage ratio of approximately 22% (incorporating equity credit for hybrid securities), which is well within the guidelines for the company’s rating. A.M. Best notes that interest coverage of nearly three times as of Sept. 30, 2015 is considered slightly below adequate relative to prior years, reflecting the lower level of earnings reported during the first three quarters of 2015. A.M. Best expects that future growth in both earnings and equity should enable the company to maintain its favorable leverage position and improve interest coverage in the near term.
A.M. Best notes that while Symetra continues to be a leading medical stop-loss carrier, the company has grown its Retirement Division, and specifically its annuity business, materially in the past few years. While business diversification is viewed favorably, A.M. Best remains concerned regarding the sustainability of earnings across key product lines given the continued low interest rate environment and evidence of lower net investment yields throughout the industry. The organization continues to focus on growth within the competitive individual life segment, through distribution growth and focus on value-added product offerings. Symetra’s solid capital position and strong balance sheet, including its well-managed, diversified, investment portfolio, partially offset potential concerns regarding pressured operating performance in the somewhat volatile interest rate environment.
The following issue ratings have been affirmed:
Symetra Financial Corporation—
— “bbb+” on $300 million 6.125% senior unsecured notes, due 2016
— “bbb+” on $250 million 4.25% senior unsecured notes, due 2024
— “bbb-” on $150 million fixed-to-floating rate junior subordinated notes, due 2067
The following shelf ratings have been affirmed:
Symetra Financial Corporation
— “bbb+” on senior unsecured debt
— “bbb” on subordinated debt
— “bbb-” on junior subordinated debt
— “bbb-” on preferred securities
This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.
