AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of The Empire Life Insurance Company and affirmed the Long-Term Issue Credit Ratings of the insurer. The outlook of these credit ratings is stable.
The ratings reflect Empire Life’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Empire maintains favourable risk-adjusted capital position
Empire Life, which is a subsidiary of E-L Financial Corporation Limited, maintains a very favourable risk-adjusted capital position, which supports its business and investment risks, said AM Best. Risk-adjusted capitalization is enhanced by the high credit quality of its investment portfolio, and continual increases in aggregate capital levels due to favourable earnings and debt issuances.
AM Best says the company continues to benefit from a diversified revenue stream, which includes the wealth management and individual insurance segments, along with continued solid results from the employee benefits segment, despite its mostly flat top-line growth.
Segregated funds expose Empire to stock market gyrations
Partially offsetting these strengths is Empire’s retention of a fair amount of segregated fund assets that exposes the company to equity market volatility, which in the COVID-19 pandemic has put pressure on the company.
AM Best says the insurer continues to face challenges in expanding its operations in its core business lines because of continued competition in the markets. Despite these challenges, it says Empire’s focus on the smaller employee market niche has been successful and has helped the company partially mitigate this risk.
In addition, AM Best says the company continues to improve branding and its digital experience for agents and clients, which should assist in improving Empire’s visibility and help differentiate it from its competitors.
