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Fitch Affirms Wilton Re's Ratings; Outlook Stable
May 22, 2017 / 8:21 PM / 7 months ago

Fitch Affirms Wilton Re's Ratings; Outlook Stable

(The following statement was released by the rating agency) NEW YORK, May 22 (Fitch) Fitch Ratings has affirmed the 'A+' (Strong) Insurer Financial Strength (IFS) ratings of Wilton Reassurance Company, Wilton Reinsurance Bermuda Limited, Wilton Reassurance Life Company of New York, Texas Life Insurance Company, and Wilco Life Insurance Company (collectively referred to as Wilton Re), as well as ivari. Fitch has also affirmed the Long-Term Issuer Default Rating (IDR) of Wilton Re Ltd. at 'A-'. The Rating Outlook is Stable. A complete list of rating actions is provided at the end of this release. Today's rating action follows the announcement that Wilton Re plans to acquire Aegon's U.S. run-off payout annuity business and bank-owned/corporate-owned life insurance business (BOLI/COLI). Wilton Re will assume $13.9 billion of reserves, over 70% of which are general account liabilities, which will be ceded on a coinsurance basis. The transaction is subject to regulatory approvals and is expected to close in the summer of 2017. KEY RATING DRIVERS The affirmation of Wilton Re's ratings reflects Fitch's view that the company will remain in a strong capital position following the transaction. Fitch expects the capital required to support the business will be funded with on-balance-sheet, excess capital. Fitch notes that the largescale transaction represents a shift in its mix of business, moving the company's business profile towards longevity risk and is outside of Fitch's previous rating expectations. Consequently, Fitch will closely monitor the transaction for the performance of actual results compared with pricing assumptions. RATING SENSITIVITIES Key rating triggers for Wilton Re's ratings that could result in a downgrade include: --Deviations from management's expectation on assumed business; --Additional material transactions in the near term; --A change in ownership; --An increase in financial leverage above 25%; --A sustained drop in the company's risk-adjusted capital position with no plans or ability to rectify; --GAAP interest coverage below 8x; --A decline in GAAP operating ROE below 8%. Key rating triggers for Wilton Re's ratings that could result in an upgrade include: --A change in Fitch's view of Wilton Re's strategic importance to CPPIB. Key rating triggers for ivari's ratings that could lead to a downgrade include: --A change in Fitch's view on the strategic importance of ivari to Wilton Re Ltd.; --A weakening in ivari's credit profile that leads to a downgrade in its standalone assessment. The ratings on $915 million secured support notes issued by Redding Funding Ltd. may change if either the quality of the assets in the collateral account changes, implying use of a different recovery assumption, or Wilton Re Ltd's IDR changes. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Wilton Reassurance Company Wilton Reinsurance Bermuda Limited Wilton Reassurance Life Company of New York Texas Life Insurance Company Wilco Life Insurance Company ivari --IFS at 'A+'; Outlook Stable. Wilton Re Ltd. --Long-term IDR at 'A-'; Outlook Stable. Wilton Re Finance LLC --$250 million 5.875% senior notes due March 30, 2033 at 'BBB+'. Redding Funding Ltd. --$915 million secured support notes due Dec. 31, 2058 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 Jeffrey A. Mohrenweiser, FSA, CFA Senior Director +1-312-368-3182 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. 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