A.M. Best Affirms Ratings of Commonwealth Annuity and Life Insurance Company.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of A- (Excellent) and issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "a-" of Commonwealth Annuity and Life Insurance Company (Commonwealth) (Worcester, MA). The outlook for both ratings is stable. The rating affirmations reflect Commonwealth's strong capitalization, emergence of statutory operating gains and execution of its planned strategy to reinsure re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. life and annuity business. In addition, as a member of The Goldman Sachs Group, Inc. (Goldman Sachs) [NYSE NYSE See: New York Stock Exchange : GS], Commonwealth has access to hedging expertise, strong brand recognition, capital and other resources, should the need arise. The company has closed several reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. transactions and has total assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. in excess of $12 billion in its relatively short operating history. A.M. Best believes that Commonwealth and its parent have the expertise and infrastructure to expand the business of reinsuring variable and fixed life and annuity business from both an administrative and investment management perspective. In conjunction with variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. acquisitions, a hedging strategy, developed in partnership with Goldman Sachs, has been implemented to reduce the level of volatility required to cover potential guaranteed minimum benefit exposure resulting from possible declines in the equity market. Despite these positive attributes, A.M. Best believes Commonwealth may encounter challenges in building its annuity book of business in an industry where a number of new entrants with low cost structures and well established life reinsurance franchises also are competing for the same business. As such, if additional blocks cannot be acquired because of price, competition or other reasons, the required scale for variable annuity business may not be attained. For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
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