A.M. Best Affirms Credit Ratings of Symetra Financial Corporation and Its Subsidiaries

November 28, 2016 by AM Best

FOR IMMEDIATE RELEASE

OLDWICK – NOVEMBER 22, 2016
A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term 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 Long-Term ICR of “bbb+” and the existing Long-Term Issue Credit Ratings (Long-Term IR) of Symetra Financial Corporation(Symetra). The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Bellevue, WA, unless otherwise specified.

The rating affirmations reflect the organization’s continued very good risk-adjusted capitalization and strong balance sheet, as well as favorable operating earnings and increasing business diversification. Symetra’s financial leverage is roughly 16% as of Sept. 30, 2016, which is favorable relative to industry and peer benchmarks. On Feb. 1, 2016, the company became a wholly owned subsidiary of Sumitomo Life Insurance Company. The merger was accounted for under the acquisition method of accounting (purchase accounting, or PGAAP). Therefore, A.M. Best notes that year-over-year financial comparisons reflect a difference in accounting methods. It is anticipated that under the new ownership, there will be no material change to business strategy and operations, or to the level of risk within the current balance sheet structure. Historically, Symetra has had a more significant investment allocation to commercial mortgage loans than industry peers. However, the company has a proven track record of favorable performance within the portfolio, which has a lower average loan-to-value and loan size.

Symetra has been a market leading carrier in the medical stop-loss space; however, A.M .Best notes the company has increased its focus on overall diversification of the enterprise by working to grow its group benefits and individual life and retirement segments. As a result, the company has reported good operating results on a combined basis across all segments, through the first three quarters of 2016, although materially lower than the prior year due in part to volatile mortality experience and new business strain. A.M. Best expects that Symetra may be challenged to report significant growth in its individual life segment due to intense competition in the market; however, the company has enhanced greatly its distribution and its product suite more recently. A.M. Best remains concerned regarding earnings sustainability across key product lines given the continued low interest rate environment and evidence of lower net investment yields throughout the industry.

The following Long-Term IRs have been affirmed:

Symetra Financial Corporation—

— “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 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 Activityweb page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.

Originally Posted at AM Best on November 22, 2016 by AM Best.