A.M. Best Co. has upgraded the issuer credit rating (ICR) to “bbb+” from “bbb” and affirmed the financial strength rating of B++ (Good) of Presidential Life Insurance Company (Presidential Life) (Nyack, NY). In addition, A.M. Best has upgraded the ICR to “bb+” from “bb” of the parent company, Presidential Life Corporation (NASDAQ: PLFE). The outlook for all ratings is stable.
The rating upgrades reflect Presidential Life’s strong capitalization, profitable earnings achieved through solid and improved investment results, along with the early stage execution of the company’s business strategy to move from a regional distributor of annuity products to a national platform.
Partially offsetting these positive ratings factors is Presidential Life’s current concentrated market profile operating as a predominantly fixed annuity business in a limited geographic area with a narrow product offering, income volatility due to exposure to the limited partnership investment asset class and high minimum crediting rates on the company’s in-force block of business.
Despite these concerns, Presidential Life’s outlook is reflective of management’s ability to manage the company’s investment risk profile, improving capitalization and A.M. Best’s expectation that solid operating performance will be sustained over the near to medium term and will contribute to organic surplus growth as the company starts the execution of growth objectives.The company is well positioned at the current ratings. Positive rating actions may occur if the company can develop a more diversified liability structure and continue to produce positive operating earnings without extraordinary items. Downward rating actions could occur if negative results in Presidential Life’s operations put into question the viability of its expansion to a national platform while creating a materially negative change in capitalization or operating performance. 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 http://www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.