AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of the primary life insurance subsidiaries of Protective Life Corporation (headquartered in Birmingham, AL), collectively known as Protective Life. Additionally, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) and the existing Long-Term Issue Credit Ratings (Long-Term IRs) of Protective Life Corporation. At the same time, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Protective Property & Casualty Insurance Company (Protective P&C) (St. Louis, MO) The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of these subsidiaries and ratings.)

The ratings of Protective Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The ratings of Protective Life also reflect its very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), favorable liquidity metrics and demonstrated financial support from its parent, Dai-ichi Life Holdings, Inc (Dai-ichi). Protective Life functions as the North America growth engine for Dai-ichi. The company is currently executing a strategy to diversify income sources and better stabilize earnings. A key part of this strategy is inorganic growth in capital-light business areas to complement the company’s longer duration asset profile and is highlighted by the recent acquisition of ShelterPoint. Financial and operating leverage at Protective Life remains within AM Best’s expectations.

The company’s operating results are strong, benefiting from consistent and diversified net income. Protective Life continues to demonstrate a well-established core competency as an acquirer of a diverse list of blocks of business, including life, annuity and asset protection blocks of business, which have been folded into the company and now contribute to earnings growth and allowed it to realize scale-related operating efficiencies. Operating return metrics continue to be in-line with peers that also have a strong operating performance assessment. In addition, Protective Life is a material contributor to overall Dai-ichi revenue and net income.

Protective Life’s business profile benefits from diversity in its distribution channels and product lines, along with continued investments in innovation. The company’s ERM is appropriate for its risk profile, which benefits from embedded stress testing of a wide range of scenarios. The company also benefits from robust ERM operations stemming from Dai-ichi, especially in data analytics.

Protective P&C’s ratings reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also reflect rating lift from its parent, Protective Life Insurance Company.

Protective P&C’s balance sheet strength assessment is supported by the strongest level of risk-adjusted capitalization, as measured by BCAR, good asset quality, adequate balance sheet liquidity and yearly organic surplus growth derived from earnings, which is partially offset by annual dividends to its parent. In 2024, an above average dividend was paid that resulted in a surplus decrease. The balance sheet strength is somewhat diminished by Protective P&C’s extensive use of unrated dealer-owned reinsurance arrangements.

AM Best considers Protective P&C’s operating performance to be adequate based on its consistent track record of profitability. Return metrics and underwriting ratios generally approximate its composite peer group of warranty insurers. In the post Covid years, operating performance benefitted from favorable market dynamics such as elevated used car valuations and pricing. However, in 2024, Protective P&C recorded an underwriting loss and combined ratio above 100% for the first time in more than 10 years.

The year-end 2024 underwriting loss was mainly due to the impact of inflation (parts and labor costs continued to increase) on guaranteed asset protection (GAP) severity combined with declining vehicle prices. These factors resulted in higher GAP loss ratios, which pushed the combined ratio slightly above 100%. In response, rate increases were implemented in 2023 & 2024; however, due to the multi-year nature of policies these will take time to roll through the book.

Protective P&C specializes in providing coverage for vehicle service contracts and GAP products for automobiles, marine craft, power sport vehicles and recreational vehicles, which are sold primarily through franchise dealers and independent agents. The neutral business profile reflects the company’s concentration of underwriting risk in the highly competitive auto warranty market, offset by its geographic diversification. The company’s ERM is appropriate for its risk profile and is integrated with that of its parent, Protective Life Insurance Company.

Rating enhancement has been afforded to Protective P&C due to the implied support from its higher-rated parent, its integration into the organization and its support of the organization’s asset protection strategy.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with stable outlooks for the following primary life insurance subsidiaries of Protective Life Corporation:

• Protective Life Insurance Company
• Protective Life and Annuity Insurance Company
• MONY Life Insurance Company

The following Long-Term IRs have been affirmed with stable outlooks:

Protective Life Corporation-

— “a-” (Excellent) on $400 million 3.40% senior unsecured notes, due 2030

— “a-” (Excellent) on $300 million 8.45% senior unsecured notes, due 2039

Protective Life Global Funding - “aa-” (Superior) program rating

— “aa-” (Superior) on all outstanding notes issued under the program

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.

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