OLDWICK, NJ–(BUSINESS WIRE)–AM Best has removed from under review with developing implications and upgrades the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a-” ((Excellent) from “ bbb+” (Good) of Sunset Life Insurance Company of America (Sunset Life) (Kansas City, MO). The outlook assigned to the Credit Ratings (ratings) is stable.
The ratings reflect Sunset Life’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Sunset Life’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is projected to remain at the assessed level of very strong or better as the company executes on its business strategy of marketing annuity products, primarily through the independent marketing organization channel. In addition, the company will benefit from capital commitments and the financial resources of Investcorp, a global investment manager, specializing in alternative investments across private equity, real estate, credit, absolute return strategies, general partner stakes, infrastructure and insurance asset management. Investcorp, which was founded in 1982, has over $40 billion of assets under management. Sunset Life also maintains good financial flexibility and liquidity resources, including a Federal Home Loan Bank membership and the ability for the holding company to issue debt. While the company will not be utilizing third-party reinsurance in the near term, this could be an option if needed during times of stress.
While Sunset Life benefits from a strong management team, scalable business model and an administrative platform that will enable end-to-end digital processing, the company is entering a highly competitive market that increases execution risks associated with new startups. However, this is mitigated partially by the company’s enterprise risk management capabilities that include comprehensive stress testing. In addition, Sunset Life’s other operational functions already have been established fully. AM Best will continue to monitor Sunset Life’s ability to execute on its current business plan without any adverse material deviation from expected capitalization levels and earnings expectations.
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