October 2, 2017 / 2:29 PM / 20 days ago

Fitch Affirms Symetra's Ratings; Outlook Stable

(The following statement was released by the rating agency) NEW YORK, October 02 (Fitch) Fitch Ratings has affirmed Symetra Life Insurance Company's (Symetra Life) Insurer Financial Strength (IFS) rating at 'A' (Strong). Fitch has also affirmed the Issuer Default Rating (IDR) of Symetra Financial Corporation (Symetra) at 'A-' and the ratings of all outstanding debt. The Rating Outlook is Stable. A complete list of rating actions follows at the end of this release. KEY RATING DRIVERS The ratings reflect Symetra's status as a wholly owned subsidiary of Sumitomo Life Insurance Company (Sumitomo). Sumitomo's IFS rating (A/ Stable) is capped by Japan's Long-Term Local-Currency IDR (A/Stable) and is one notch below its unconstrained IFS rating of 'A+'. Fitch classifies Symetra as a 'Very Important' subsidiary within the Sumitomo enterprise and as such, rates its IDR and debt one notch higher than it would on a standalone basis, reflecting its parent's unconstrained rating and considering its enhanced financial and capital resources. Fitch views Symetra's standalone credit profile as in line with an 'A' IFS rating, which reflects the company's strong capitalization, moderate financial leverage and diversified earnings. Additional strengths include the company's solid competitive position in the group medical stop-loss market and fixed annuities sold through banks. The standalone credit profile also considers Symetra's exposure to the protracted low interest rate environment. Fitch believes that with its liability mix, particularly its large legacy structured settlement and bank owned life insurance books, Symetra is more exposed to interest rate risk than peers. Fitch views Symetra's earnings as weaker than the rating level and expects continued pressure in the low interest rate environment. Results have deteriorated in recent periods as the company's statutory return on total adjusted capital was 1.2% in 1H17 following 2.2% for the full year 2016. Symetra's benefits segment, which can be a significant but volatile source of profitability, has been pressured recently. In 1H17, the segment's loss ratio was 78%, up from recent periods and well above management's target of 65%-67%. Fitch views Symetra Life's risk-adjusted capital as strong for the rating. The company's RBC ratio declined in 1H17 to an estimated 403% from 413% as of year-end 2016. However, RBC remains both strong for the rating level and above management's target of 350%. Symetra's Prism capital model score in 2016 was 'Strong', which is consistent with the prior year and in-line with the rating level. Fitch considers Symetra's use of financial leverage as reasonable considering its profile and rating level. Financial leverage was 16% as of June 30, 2017, consistent with the prior year period. Leverage declined from historically in the low 20%-range due to purchase accounting adjustments in 2016 whereby shareholders' equity was set equal to Sumitomo's purchase price. Symetra's total financings and commitments (TFC) ratio remains modest at 0.2x. Fitch views Symetra's debt service capabilities and financial flexibility as strong. The company's GAAP interest coverage was 7x in the first-half 2017, which improved from recent periods due to a reduced interest expense. Fitch expects run-rate coverage to remain near the current level. In 1H17, Symetra paid $180 million of dividends to Sumitomo. Future dividends are expected to be proportional to the company's earnings. Symetra's diversified investment portfolio continues to perform well. The company's risky asset ratio of 82% at year-end 2016 was in line with the life industry average. The ratio increased from the prior year mainly due to increased asset leverage. Symetra remains overweight common stocks, which is offset by its underweight alternatives position. Additionally, the portfolio remains overweight commercial mortgage loans (17% of invested assets). The loan portfolio has grown rapidly over recent years, which Fitch views cautiously, but the quality remains strong. RATING SENSITIVITIES Symetra Life's IFS rating could be upgraded one notch above Sumitomo's IFS rating if its standalone credit profile improved to 'A+'. As a 'Very Important' subsidiary of Sumitomo, Symetra Life's IFS rating could also be upgraded in conjunction with an upgrade of the parent. In the event of a one notch downgrade of the parent's IFS rating or Symetra's standalone credit profile to 'A-', Symetra Life could maintain its current 'A' IFS rating per Fitch's criteria. Symetra's holding company ratings are notched based on Sumitomo's unconstrained rating of 'A+', meaning a two notch upgrade of Sumitomo's IFS rating would be needed to upgrade Symetra's holding company ratings. In the event of a one notch downgrade of Sumitomo's ratings, Fitch could affirm Symetra's holding company ratings. However, if Sumitomo's ratings were downgraded by more than one notch, based on its own credit quality, or deterioration in Japan's sovereign rating, Symetra's holding company ratings would also likely be lowered in conjunction with its parent. Fitch has affirmed the following with a Stable Outlook Symetra Financial Corp. --IDR at 'A-'; --4.25% senior unsecured notes due July 15, 2024 at 'BBB+'; --8.3% junior subordinated CENts due Oct. 15, 2067 at 'BBB-'. Symetra Life Insurance Company --IFS at 'A'. First Symetra National Life Insurance Company of New York --IFS at 'A'. Contact: Primary Analyst Jamie R. Tucker, CPA Associate Director +1-212-612-7856 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Julie A. Burke, CPA, CFA Managing Director +1-312-368-3158 Committee Chairperson Douglas M. Pawlowski, CFA Senior Director +1-312-368-2054 Media Relations: Benjamin Rippey, New York, Tel: +1 646 582 4588, Email: benjamin.rippey@fitchratings.com. Additional information is available on www.fitchratings.com 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

Our Standards:The Thomson Reuters Trust Principles.
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