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A.M. Best Affirms Credit Ratings of Insurance Subsidiaries of Nassau Reinsurance Group Holdings, L.P.
[March 29, 2018]

A.M. Best Affirms Credit Ratings of Insurance Subsidiaries of Nassau Reinsurance Group Holdings, L.P.


A.M. Best has affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "bb+" of the key life/health (L/H) subsidiaries of The Phoenix Companies, Inc. (Phoenix) (headquartered in Hartford, Connecticut). Additionally, the Long-Term ICR of "b" of Phoenix and its existing Long-Term Issue Credit Ratings (Long-Term IR) have been affirmed. Concurrently, A.M. Best has affirmed the FSR of B (Fair) and the Long-Term ICRs of "bb+" of The Pyramid Life Insurance Company (Pyramid Life) (Overland Park, KS) and Constitution Life Insurance Company (Constitution Life) (Houston, TX). The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and ratings.)

The rating affirmations reflect Phoenix's balance sheet strength, which A.M. Best categorizes as adequate, as well as its weak operating performance, neutral business profile and marginal enterprise risk management. Phoenix maintains a strong level of risk-adjusted capitalization, and a well-managed and diverse general account investment portfolio. In 2017, the company reported increased risk-adjusted capitalization, improved capital adequacy, and focused on transformational efforts to enhance systems and improve efficiencies and reduce expenses. The company maintained adequate liquidity; however, financial flexibility remains limited due to its weakened credit profile from the impact of prior years' results. However, improved access to capital from Phoenix's ultimate parent, have partially mitigated this concern. Notwithstanding the improved operating results in 2017, the company has in recent years experienced significant losses associated in part with the resolution of all material legacy litigation, statutory net losses in its universal life insurance block of business and the level of one-time expenses. In 2016, Phoenix also ceded approximately 50% of its in-force fixed-indexed annuity business and 50% of new annuity sales to an unrated affiliated offshore reinsurance company, Nassau Re Cayman. A.M. Best believes that Phoenix's enhanced risk-management capabilities will reduce the likelihood f additional material events occurring going forward.

Overall sales have generally declined in recent periods due to a combination of capital constraints prior to its acquisition by Nassau Re, the transition to a new streamlined product offering and the impact of the changes in the DOL rules on industry-wide sales. A.M. Best notes that positive cash flows from its legacy block of participating whole life insurance business have largely offset losses from elevated expenses and one-time events that have occurred over the past several years. A.M. Best expects a general improvement in the company's operating performance over the medium-term as the new management team implements its business plan focused on streamlining operations and implementing further expenses management and investing in growth as it re-enters the marketplace with new products.

The FSR of B (Fair) and the Long-Term ICRs of "bb+" have been affirmed with a stable outlook for the following L/H subsidiaries of Nassau Reinsurance Group Holdings, L.P.:


  • Phoenix Life Insurance Company
  • PHL Variable Insurance Company
  • Phoenix Life and Annuity Company
  • The Pyramid Life Insurance Company
  • Constitution Life Insurance Company

The following Long-Term IRs have been affirmed:

The Phoenix Companies, Inc.-
-- "b" on $300 million 7.45% senior unsecured notes, due 2032 (approx. $253 million outstanding)

Phoenix Life Insurance Company-
-- "b+" on $175 million 7.15% surplus notes, due 2034 (approx. $126 million outstanding)

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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