A.M. Best has assigned a financial strength rating of A (Excellent) and an issuer credit rating of "a+" to the Allstate Assurance Company (AAC) (Northbrook, IL). AAC is a wholly-owned subsidiary of the Allstate Life Insurance Company (ALIC), a member of the Allstate Financial Companies (Allstate Financial) that is ultimately owned by The Allstate Corporation (Allcorp) [NYSE:ALL]. The outlook assigned to both ratings is positive.

The assigned ratings reflect AAC's developing business profile and anticipated strategic value to Allstate Financial. The ratings also reflect the strong brand name recognition and considerable benefits derived from its affiliation with Allstate Insurance Company (AIC) and its property/casualty affiliates (together, Allstate) that market products using the Allstate brand, as well as the implicit and expected explicit financial support of its ultimate parent, Allcorp.

Beginning in 2015, it is anticipated that AAC will begin issuing the majority of Allstate Financial's new life insurance business solely utilizing Allstate's exclusive agencies, which are supported by Allstate Financial's exclusive financial specialists. AAC plans to offer interest-sensitive and traditional life insurance products including indexed and variable life insurance with an emphasis on helping meet the life insurance protection needs of Allstate's auto and homeowner customers. A.M. Best notes that Allstate Financial recently exited the independent agent channel and no longer issues proprietary annuity products. Also in 2015, it is expected that ALIC will reinsure seasoned blocks of interest-sensitive life policies to AAC in order to provide AAC a stream of profits and a sizeable initial asset portfolio. A subsidiary of Allcorp is also expected to make an initial capital infusion to support the reinsured businesses and the near-term anticipated new business growth. Finally, the majority of new business issued by AAC is expected to be reinsured to ALIC. All expected reinsurance arrangements will be subject to normal regulatory approvals. Based on a review of AAC's financial plans, A.M. Best believes that stand-alone risk-adjusted capitalization will be adequate to support the company's business and investment risks. In assigning a positive outlook to AAC's ratings, A.M. Best anticipates that over the near-term, AAC is likely to qualify for the same level of rating enhancement currently provided to the other Allstate Financial companies.

A.M. Best notes that AAC's insurance liabilities are not expected to be guaranteed by Allcorp, AIC or ALIC, and a capital support agreement has not been established. Additionally, A.M. Best believes that AAC will be challenged to maintain statutory profitability despite the stream of profits expected from its assumption of the seasoned blocks of interest-sensitive life business from ALIC. Expense strains anticipated from new business growth coupled with potentially prolonged low interest rates may hinder the rate of earnings growth. Finally, A.M. Best believes the company may be challenged to maintain adequate risk-adjusted capitalization to support its anticipated new business growth without additional capital infusions.

Positive rating actions for AAC could result from positive rating actions taken by A.M. Best on the ratings of Allcorp, AIC or members of Allstate Financial. Positive rating actions could also result if, in A.M. Best's view, ACC meets the criteria for full rating enhancement as outlined in Best's "Rating Members of Insurance Groups" criteria. Factors that could result in negative rating actions include negative rating actions taken by A.M. Best on Allcorp, AIC or members of Allstate Financial, a material change in A.M. Best's view of the strategic importance of AAC and/or members of Allstate Financial to Allcorp, a significant and sustained decline in AAC's stand-alone risk-adjusted capitalization, net operating performance that does not meet A.M. Best's expectations over an extended period of time, or if meaningful top-line growth does not materialize.

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.

Key insurance criteria reports utilized:
  • A.M. Best's Liquidity Model for U.S. Life Insurers
  • Rating Members of Insurance Groups
  • Rating New Company Formations
  • Risk Management and the Rating Process For Insurance Companies
  • Understanding BCAR for U.S. And Canadian Life/Health Insurers

This press release relates to rating(s) 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 visit A.M. Best's Ratings & Criteria Center .

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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