Reuters logo
Fitch Affirms Minnesota Life's IFS Ratings at 'AA'; Stable Outlook
May 9, 2017 / 6:29 PM / 7 months ago

Fitch Affirms Minnesota Life's IFS Ratings at 'AA'; Stable Outlook

(The following statement was released by the rating agency) CHICAGO, May 09 (Fitch) Fitch Ratings has affirmed the Insurer Financial Strength (IFS) ratings of Minnesota Life Insurance Company (Minnesota Life) and its subsidiary, Securian Life Insurance Company, at 'AA'. The Rating Outlook is Stable. The 'A+' rating of Minnesota Life's surplus notes was also affirmed. See list at the end of this release. KEY RATING DRIVERS Fitch's affirmation of Minnesota Life's ratings reflects the company's extremely strong balance sheet, conservative risk profile and stable earnings. The ratings also reflect its strong position in the highly competitive group life insurance market. Fitch views Minnesota Life's extremely strong capitalization, which is reflected by its NAIC risk-based capital (RBC) ratio of 517% at year-end 2016, as a fundamental strength to its rating. Operating leverage, as measured by adjusted liabilities to total adjusted capital, is among the lowest in Fitch's rating coverage at 4.8x. Financial leverage, defined as surplus notes to total adjusted capital (TAC), remains extremely low at 3.6%. Minnesota Life has balanced and diversified sources of revenue that reduce earnings volatility. Pretax operating return on assets declined to 0.77% in 2016, compared with 0.97% in 2015. Minnesota Life's reported net income also declined, to $248 million in 2016, compared to $281 million in 2015. The decline was largely driven by unfavorable mortality results, partially offset by better interest and expense margins, and improved results from strategic affiliates. Fitch anticipates that low interest rates will continue to serve as a headwind to Minnesota Life's profitability. Also, significant capital market declines could lead to lower fee income and increased earnings volatility, given the company's sizeable separate account liabilities. Fitch notes that Minnesota Life's investment and liquidity profile continues to be favorable. The company has a large, investment-grade, publicly traded bond portfolio, relatively low exposure to risky assets and a stable liability structure. Minnesota Life has a strong competitive position in the group life insurance market, as the third largest provider in terms of insurance in force. The company's competitive advantage is supported by its service-driven model and customized systems, which support very strong retention levels. However, the company faces intense competition from larger companies with greater scale and resources. Additionally, the company faces scale pressure in the highly competitive retirement services market, which continues to consolidate. RATING SENSITIVITIES The key rating triggers that could result in an upgrade include: --An enhanced market position and size/scale combined with sustained capital strength and low asset risk. The key rating triggers that could result in a downgrade include: --A decline in the company's RBC ratio to 450% or lower; --Significant deterioration in financial performance with a sustained GAAP-based return on assets below 0.80%; --An increase in financial leverage above 15% as measured by debt-to-total capital. FULL LIST OF RATING ACTIONS Fitch has affirmed the following: Minnesota Life Insurance Company --IFS at 'AA'; --Issuer Default Rating at 'AA-'; --$118 million Rule 144a surplus notes 8.25% due 2025 at 'A+'. Securian Life Insurance Company --IFS at 'AA'. The Rating Outlook is Stable. Contact: Primary Analyst Donald F. Thorpe, CPA, CFA Senior Director +1-312-606-2353 Fitch Ratings, Inc. 70 W. Madison St. Chicago, IL 60602 Secondary Analyst Dafina M. Dunmore, CFA Director +1-312-368-3136 Committee Chairperson Doug M. Pawlowski, CFA Senior Director +1-312-368-2054 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below