|[July 03, 2014]
A.M. Best Affirms Ratings of Great-West Lifeco Inc. and Its Subsidiaries
OLDWICK, N.J. --(Business Wire)--
A.M. Best has affirmed the financial strength rating of A+
(Superior) and the issuer credit ratings (ICR) of "aa" of The
Great-West Life Assurance Company (Winnipeg, Manitoba) and its
affiliates, London Life Insurance Company (London, Ontario), The
Canada Life Assurance Company (CLAC) (Toronto, Ontario), Great-West
Life & Annuity Insurance Company (GWL&A) (Greenwood Village, CO)
and Great-West Life & Annuity Insurance Company of New York
(White Plains, NY) (together referred to as the Great-West Life Group).
Concurrently, A.M. Best has affirmed the ICR of "a" and the existing
debt ratings of Great-West Lifeco Inc. (Lifeco) (Winnipeg,
Manitoba). The outlook for all ratings is stable. (See link below for a
detailed listing of the companies and ratings.)
The rating affirmations reflect Great-West Life Group's highly
diversified earnings profile by product and geography, strong market
position in its core business lines, solid regulatory capital levels and
the financial strength and support of its ultimate majority shareholder,
Power Corporation of Canada. Additionally, the Great-West Life Group has
continued to achieve significant and sustainable scale advantages in its
core business lines in Canada and the United States through strategic
acquisitions. Given Great-West Life Group's diversified insurance,
reinsurance and financial services operations, along with its strong
enterprise risk management capabilities, the impact it has experienced
from volatile market conditions and low interest rates has been
The ratings also consider Lifeco's adjusted financial leverage position,
which continues to remain within its targeted range. The organization
has consistently generated significant cash flows from operations and
has historically demonstrated its ability to manage its financial
leverage and interest coverage within A.M. Best's expectations for its
Moreover, A.M. Best recognizes Great-West Life Group's consolidated
position as a market leader in the Canadian individual and group
insurance lines, with superior market positions in the wealth
accumlation and protection segments, stable earnings contributions from
its U.S. operations as it grows its retirement savings business and
further diversification derived from the European business segments,
which includes the recent acquisition of Irish Life Assurance plc.
In addition, Lifeco maintains an excellent liquidity posture supported
by high quality investments, credit facilities and stable sources of
The Great-West Life Group's leading market position in Canada has
remained strong over the years, while its conservative pricing
discipline and low expense structure enable it to generate favorable
operating results. Moreover, the Canadian distribution systems of Lifeco
and its operating companies represent the largest in Canada and serve as
a significant competitive advantage.
In the United States, GWL&A is a well-established player with
considerable strength in the public and non-profit financial services
sector and provides a stable source of earnings for Lifeco. Once the
recently announced acquisition of J.P. Morgan Retirement Services'
large-market record keeping business closes, GWL&A will have a number
two ranking among defined contribution providers based upon the number
of participants. CLAC, which operates in Canada as well as Europe, is
among the top 20 life insurers in the United Kingdom, with an
industry-leading 30% market share in the group life market.
The economic events experienced in recent years have pressured
Great-West Life Group's overall operating performance, although the
group's life insurance entities have not experienced the same level of
earnings sensitivity from equity market volatility as its competitors.
In addition, A.M. Best expects that the group will continue to face
challenges associated with growth in its core U.S. business segments due
to the highly competitive environment, as well as continued losses from
Putnam Investments. As the global economy and regulatory environment
evolves, A.M. Best expects any potential growth strategies will require
a more stringent focus and a longer time horizon to record meaningful
growth over the medium to longer term.
A.M. Best believes that upward rating movement for the Great-West Life
Group is unlikely over the near to medium term. Key factors that could
result in negative rating actions include a significant and sustained
decline in the organization's risk-adjusted capitalization, operating
performance that does not meet A.M. Best's expectations over a sustained
period and/or financial leverage or interest coverage that falls
materially short of the guidelines for its current rating level.
For a complete listing of Great-West Lifeco Inc. and its subsidiaries'
financial strength, issuer credit and debt ratings, please visit www.ambest.com/press/070303greatwest.pdf.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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