Athene A-rating affirmed by AM Best
AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a+” (Excellent) of the members of Athene Group, which is the consolidation of the organisation’s US operating companies, along with its affiliated reinsurance companies domiciled in Bermuda.
Additionally, AM Best has affirmed the long-term ICR of “bbb+” (Good), the existing long-term issue credit ratings and the indicative long-term IRs of Bermudian-based Athene Holding Ltd, which operates as the holding company for the US and Bermuda operations.
The outlook of these credit ratings is stable.
Concurrently, AM Best has assigned an FSR of A (Excellent) and the long-term ICR of “a+” (Excellent) to Bermudian-based Athene Annuity Re Ltd. The outlook assigned to this rating is stable.
The ratings reflect Athene’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.
AM Best views Athene’s consolidated risk-adjusted capitalisation as strongest, as measured by Best’s capital adequacy ratio, and supported by favourable financial flexibility.
The agency said Athene has demonstrated its ability to access capital markets and maintains additional access to capital and liquidity through a revolving credit facility, Federal Home Loan Bank borrowing capacity, and a shelf registration statement, as well as uncalled capital commitments from Athene Co-Invest Reinsurance Affiliates (ACRA) investors.
The completed merger with Apollo Global Management Inc is expected to increase Athene’s financial flexibility, AM Best said.
Financial leverage metrics have improved in the past year as capital growth has outstripped debt issuances. However, AM Best notes that Athene holds elevated allocations to more complex and less-liquid investments, which could be impacted materially under adverse market conditions.
Athene has a track record of strong earnings driven by favourable earning spreads and operating profitability, despite the challenges related to the persistent low interest rate environment and high competitive pressures.
The agency said Athene’s favourable business profile reflects continued enhancements through additional distribution channels in its retail markets, and expansion of its pension risk transfer business in the United States and United Kingdom, its increased issuances of funding agreements and of its flow reinsurance channel in Japan in recent years.
Furthermore, ACRA and the recent fixed annuity reinsurance agreement with Jackson National Life Insurance Company have been accretive to earnings.
The FSR of A (Excellent) and the long-term ICRs of “a+” (Excellent) have been affirmed with stable outlooks for other members of Athene Group.
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