AM Best Revises Outlooks to Positive for EquiTrust Life Insurance Company

AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of EquiTrust Life Insurance Company (EquiTrust) (headquartered in Chicago, IL).

The Credit Ratings (ratings) reflect EquiTrust’s balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The positive outlooks reflect EquiTrust’s trend of increasing levels of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s risk-adjusted capitalization levels have increased over the past few years due to capital contributions from its parent, a lack of stockholder dividends and favorable operating results. EquiTrust also maintains a strong liquidity profile with strong and steady operating cash flows, very good surrender protection on in-force annuity business and additional borrowing capacity through the Federal Home Loan Bank. Overall premiums have increased in recent periods. Additionally, the organization continues to add new distribution relationships, which have led to additional sales. These factors are expected to drive growth over the near to intermediate term.

EquiTrust’s reinsurance leverage has declined significantly over the past several years, though the company does utilize unrated carriers for some of its reinsurance needs. Interest spreads have remained favorable while crediting rates also have increased with the earned rates.

Partially offsetting these positive factors is the lack of audited financial statements from its parent. AM Best notes that the company maintains some concentration in structured securities, which currently comprise just under one-quarter of the general account investment portfolio. Partially mitigating this concern in AM Best’s view is that EquiTrust manages the investment portfolio well with good diversity by sector and a low level of impairments.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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