Global Atlantic rating reflects Forethought, AVIVA acquisition agreements
A.M. Best Co. has reported that they have assigned an issuer credit rating (ICR) of ‘bbb-' to Global Atlantic Financial Group (Global Atlantic), headquartered in Bermuda.
The outlook, assigned by the insurance ratings company, is stable.
The financial strength rating of A- (Excellent) and the ICRs of ‘a-' of the insurance operating entities of Global Atlantic are unchanged.
Global Atlantic is a financial services holding company designed to to acquire and grow businesses in the insurance and reinsurance marketplace.
A.M. Best said Global Atlantic's ICR reflects its recent acquisition of AVIVA plc's US life insurance business from Athene Holding Ltd. and the recent announcement that Global Atlantic has entered into a definitive agreement to acquire Forethought Financial Group, Inc. and its key subsidiary, Forethought Life Insurance Company. “Both acquisitions will provide Global Atlantic with new sources of earnings diversification as well as enhance its product lines and distribution channels,” states the Best press release.
“Global Atlantic will remain challenged with respect to integrating and branding these large transactions,” Best said.
The rating agency added that additional offsetting rating factors include the company's elevated, although declining, exposure to structured securities within its fixed income portfolio and the challenges of the low interest rate environment.
“Furthermore,” said Best: “Global Atlantic's business plan is fairly new and remains untested.
“A.M. Best believes Global Atlantic will remain well positioned at its current rating level.”
Best warned: “Negative rating actions could occur if the company's capitalisation, operating performance or both fall markedly short of A.M. Best's expectations. Negative rating actions also could occur should there be earnings pressure or a failure to successfully integrate current and future acquisitions.”