Talcott Life Re’s financial strength rated as excellent
Bermuda-based reinsurer Talcott Life Re, Ltd has received a financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent) from credit rating agency AM Best. The outlook of these credit ratings is stable.
The ratings reflect Talcott’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Results from AM Best’s capital adequacy ratio show the balance sheet at the assessed level of strongest, due in part to relatively conservative initial investment allocations for year-end 2021 and pro forma 2022.
Talcott has utilised resources and already established policies and procedures for investment management and for its ERM framework.
AM Best anticipates that Talcott will engage in future transaction activity as it executes its strategy of engaging in reinsurance flow transactions and block acquisitions.
Despite these favourable assessments, AM Best notes that along with many others in the industry, Talcott has substantial unrealised losses owing to the rising interest-rate environment’s impact on long-duration assets.
Mitigating this risk, however, is the company’s favourable liquidity driven by prudent asset liability management, inter-company lines of credit, non-utilised third-party financing and the implicit support of a large ultimate parent.
AM Best will continue to monitor the evolution of asset holdings as Talcott’s portfolio is redeployed over time to target allocations.
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