OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has downgraded the Financial Strength Rating (FSR) to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “a-” (Excellent) of Lincoln Benefit Life Company (LBL) (headquartered in Rosemont, IL). The outlook of these Credit Ratings (ratings) has been revised to stable from negative. In addition, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Guaranty Income Life Insurance Company (GILIC) (headquartered in Baton Rouge, LA) and United Life Insurance Company (ULIC) (Cedar Rapids, IA). Collectively, referred to as Guaranty Income Life Insurance Group. Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Kuvare Life Re Ltd. (Kuvare Re) (Bermuda). The outlook of these ratings is stable.

LBL’s ratings reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings of Guaranty Income Life Insurance Group also reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

Kuvare Re’s ratings reflect balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

The revised outlooks for LBL’s ratings recognize the continued capital support required for its captive reinsurer, Lancaster Re Captive Insurance Company, and resulting impacts that is expected to have on LBL’s capital flexibility moving forward. The deterioration in the company’s capital trends is due to underperformance in its runoff universal life with secondary guarantees (ULSG) business beyond initial projections. Mitigating factors include the company’s growth through funding agreement issuances and assuming reinsurance of third-party liabilities, as well as the expectation for profitability as the ULSG business approaches its peak reserve in the coming years.

The ratings of Guaranty Income Life Insurance Group reflect the group’s solid operating improvements over the last several years, including premium growth in its key annuity products, significant distribution expansion and stable operating profile with favorable operating returns. Also noted are key initiatives that have improved capitalization prospects including the launch of a sidecar, third-party reinsurance agreement and management’s focus on attracting other capital sources into the business in the near term. In addition, AM Best expects the organization to have a measured approach to growth within future risk-based capital limits.

Offsetting rating factors include the impact of new business strain on operating results and capital. Additionally, Guaranty Income Life Insurance Group’s reserve book is heavily weighted in interest sensitive reserves with a concentrated product profile. In AM Best’s view, risk-adjusted capitalization is qualitatively diminished due to a high percentage of surplus notes, as well as increased leverage at Kuvare US Holdings, Inc., which is expected to be managed down in the short to medium term as capital grows. Also noted is the high use of reinsurance including external and affiliated entities.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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