DUE CARE UPDATE. Pan-American (Ratings Affirmation) Brighthouse (Ratings Affirmation) Phoenix Life (Ratings Upgrade) October 2, 2017

Transcription

1 Pan-American (Ratings Affirmation) Fitch Ratings: 9/20/17 Financial Strength: A (Strong, 6 of 21) / Outlook: Stable + Very strong capitalization (RBC ratio of 598%) + Conservative product profile generates stable earnings (no exposure to equity market risk) - Non-U.S. insurance operations are concentrated in Latin America and the Caribbean, which generally have sovereign ratings lower than Pan-American s - Competitors have significantly greater scale, market share, and pricing power Brighthouse (Ratings Affirmation) A.M. Best: 8/23/17 Financial Strength: A (Excellent, 3 of 15) / Outlook: Stable A.M. Best will continue to monitor the company s ability to execute as a newly formed publicly traded company, including its ability to build its new brand, [and] effectively manage its elevated expense structure that is the result of the separation from MetLife. + Adequate level of risk-adjusted capitalization after spin-off from MetLife + Strong risk-management program - Revised hedging program could negatively impact capital and surplus - Significant amount of fixed annuities are at guaranteed minimum interest rates, increasing the risk of spread compression if interest rates continue to remain low Phoenix Life (Ratings Upgrade) Standard & Poor s: 8/25/17 Financial Strength: BB (Marginal, 12 of 20) from BB- (Marginal) / Outlook: Stable from Positive + Weak financial risk profile and weak capital adequacy + Has not earned a profit in several years Page 1 of 5

2 + Nassau Re, who recently acquired Phoenix Life, has made progress in improving the balance sheet AIG (Ratings Affirmation) Fitch Ratings: 9/7/17 Financial Strength: A+ (Strong, 5 of 21) / Outlook: Negative s Operating performance for AIG s life insurance subsidiaries has generally been stronger and more stable than its property casualty subsidiaries. + Strong statutory capital position (509% Risk-Based Capital ratio at end of 2016) + Leading market share in key lines of business + Revenue diversification includes insurance premiums, spread business, and fees - Exposure to legacy underperforming business - Struggling P&C operation negatively affecting parent company s financials MetLife (Ratings Affirmation) Fitch Ratings: 9/6/17 Financial Strength: AA- (Very Strong, 4 of 21) / Outlook: Stable Fitch views the separation of the Brighthouse Financial-related businesses as neutral to MetLife s ratings since any decline in diversification of MetLife as a result of the separation will largely be mitigated by the lower risk profile of the businesses remaining within MetLife. + RBC ratio of 436% + Large scale and very strong brand name + Very strong position in U.S. and international insurance markets + Strong balance sheet - Above-average investment risk has led to low operating profits in recent years due to low interest rates Page 2 of 5

3 Athene (Outlook Revision) A.M. Best: 8/16/17 Financial Strength: A- (Excellent, 4 of 15) / Outlook: Positive from Stable + Diversified distribution channels, specifically flow reinsurance and funding-agreement backed notes, have expanded profitable opportunities outside of retail individual annuities + Access to additional capital resources, such as private equity, since IPO in December High-risk assets comprise an above-average proportion of total adjusted capital Genworth (Ratings Downgrade) Standard & Poor s: 9/18/17 Financial Strength: B+ (Weak, 14 of 20) from BB- (Marginal) / Outlook: CreditWatch with Negative Implications + Less-than-adequate financial risk profile + Delayed acquisition by China Oceanwide due to uncertainty regarding regulatory approval + Fair management and governance + Underperforming LTC in-force block Fitch Ratings: 9/26/17 Financial Strength: BB (Moderately Weak, 12 of 21) / Outlook: Rating Watch Evolving The Rating Watch Evolving status reflects uncertainty as to whether the proposed transaction will be approved, as well as uncertainties as to China Oceanwide s effect on Genworth s financial and operating strategies should the transaction close. Fitch U.S. Life Industry Upgrades Outpace Downgrades in First Half of 2017 A.M. Best: 8/14/17 Favorable equity markets aided improving levels of risk-adjusted capital and strengthened business profiles among U.S. life/annuity carriers in the first half of 2017, which has been reflected in recent financial strength ratings. A.M. Best reported 10 upgrades to life/annuity insurers and six downgrades, compared to three upgrades and three downgrades in the first half of In comparison, four health insurers have been upgraded in 2017 while six have been downgraded. Page 3 of 5

4 A.M. Best revised the rating outlook for the U.S. life/annuity industry in December 2016 to negative from stable, as rating downgrades were expected to outweigh rating upgrades. A.M. Best maintains this position as it does not believe current trends are sustainable, citing regulatory burdens (e.g., DOL fiduciary rule) and the low interest rate environment as headwinds for the industry. M Due Care Updates provide periodical industry updates that consolidate and analyze news, ratings actions, and analyst comments for Member Firms. This was delivered to you on behalf of M Financial Group and is sent only to M Financial Member Firms. M Financial Group will continue to monitor and evaluate developments relating to s and the industry as a whole. If you have any questions or comments, please contact any member of the M Product Management team at Page 4 of 5

5 M Financial Carriers Summary of Financial Strength Ratings () A.M. Best Standard & Poor's FSR Description Category Outlook Eff. Date FSR Description Category Outlook Eff. Date John Hancock A+ Superior 2 of 15 Stable 5/25/17 John Hancock AA- Very Strong 4 of 20 Stable 4/14/16 Nationwide A+ Superior 2 of 15 Stable 7/7/16 Nationwide A+ Strong 5 of 20 Stable 5/24/17 Pacific Life A+ Superior 2 of 15 Stable 1/6/17 Pacific Life AA- Very Strong 4 of 20 Stable 5/12/17 Prudential A+ Superior 2 of 15 Stable 9/2/16 Prudential AA- Very Strong 4 of 20 Stable 1/26/17 TIAA A++ Superior 1 of 15 Stable 6/8/17 TIAA AA+ Very Strong 2 of 20 Stable 9/14/17 UNUM A Excellent 3 of 15 Stable 4/7/17 UNUM A Strong 6 of 20 Stable 6/5/17 Lincoln National A+ Superior 2 of 15 Stable 12/13/16 Lincoln National AA- Very Strong 4 of 20 Stable 10/24/16 Symetra A Excellent 3 of 15 Stable 11/22/16 Symetra A Strong 6 of 20 Stable 7/17/17 Delaware Life A- Excellent 4 of 15 Stable 6/8/17 Delaware Life BBB+ Good 8 of 20 Stable 5/19/17 Sun Life of CA A+ Superior 2 of 15 Stable 12/2/16 Sun Life of CA AA- Very Strong 4 of 20 Positive 4/7/17 Voya A Excellent 3 of 15 Stable 11/17/16 Voya A Strong 6 of 20 Stable 3/8/17 Moody's Fitch Ratings IFS Description Category Outlook Eff. Date IFS Description Category Outlook Eff. Date John Hancock A1 Good 5 of 21 Stable 8/7/17 John Hancock AA- Very Strong 4 of 21 Stable 4/11/17 Nationwide A1 Good 5 of 21 Stable 7/14/17 Nationwide - Withdrawn /18/13 Pacific Life A1 Good 5 of 21 Stable 5/19/17 Pacific Life A+ Strong 5 of 21 Stable 1/12/17 Prudential A1 Good 5 of 21 Stable 6/28/17 Prudential AA- Very Strong 4 of 21 Stable 5/2/17 TIAA Aa1 Exceptional 2 of 21 Stable 8/9/17 TIAA AAA Exceptional 1 of 21 Stable 3/16/17 UNUM A2 Good 6 of 21 Stable 4/28/17 UNUM A Strong 6 of 21 Stable 3/24/17 Lincoln National A1 Good 5 of 21 Stable 6/30/17 Lincoln National A+ Strong 5 of 21 Stable 12/6/16 Symetra A2 Good 6 of 21 Stable 4/14/17 Symetra A Strong 6 of 21 Stable 5/2/17 Delaware Life - Withdrawn /12/16 Delaware Life Sun Life of CA Aa3 Excellent 4 of 21 Stable 4/24/17 Sun Life of CA AA- Very Strong 4 of 21 Stable 4/3/17 Voya A2 Good 6 of 21 Stable 6/5/17 Voya A Strong 6 of 21 Stable 8/8/17 Comdex Comdex John Hancock 92 Delaware Life 56 Nationwide 89 Sun Life of CA 94 Pacific Life 90 Voya 77 Prudential 92 TIAA 99 UNUM 77 Lincoln National 90 Symetra 77 Page 5 of 5