AM Best Affirms Credit Ratings of The Empire Life Insurance Company

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of The Empire Life Insurance Company (Empire Life) (Kingston, Ontario, Canada). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of Empire Life. The outlook of these Credit Ratings (ratings) is stable. (See below for details of the Long-Term IRs.) Empire Life is a subsidiary of E-L Financial Corporation Limited (E-L Financial), which operates as a publicly traded Canadian investment and insurance holding company.

The ratings reflect Empire Life’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

Empire Life maintains a very favorable risk-adjusted capital position, which supports its business and investment risks. Risk-adjusted capitalization is enhanced by the high credit quality of its investment portfolio, and continual increases in aggregate capital levels due to favorable earnings and debt issuances. Empire Life’s capitalization has supported growth while maintaining levels that support its stressed capital targets. In addition, operating results have been consistently positive during the past five years. The company continues to benefit from a diversified revenue stream, which includes the wealth management and individual insurance segments, along with continued solid results from the employee benefits segment, despite its mostly flat top-line growth. The company continues to monitor its product suite and pricing to meet the current economic, regulatory and competitive landscapes.

Partially offsetting these strengths is Empire Life’s retention of a fair amount of segregated fund assets that exposes the company to equity market volatility, which in the COVID-19 pandemic has put pressure on the company. In addition to having equity market risks within its product portfolio, Empire Life maintains a higher allocation of equity investments, compared with those of its peers, within its general account investment portfolio. Empire Life continues to face challenges in expanding its operations in its core business lines because of continued competition in the markets. Despite these challenges, Empire Life’s focus on the smaller employee market niche has been successful and has helped the company partially mitigate this risk. In addition, the company continues to improve branding and its digital experience for agents and clients, which should assist in improving Empire Life’s visibility and help differentiate it from its competitors.

The following Long-Term IRs of Empire Life have been affirmed with a stable outlook.

-- “bbb+” on CAD 200 million 3.664% fixed/floating rate subordinated debentures, due March 15, 2028
-- “bbb+” on CAD 200 million 3.383% fixed/floating rate subordinated debentures, due Dec. 16, 2026
-- “bbb” on CAD 149.5 million non-cumulative rate reset Series 1 preferred shares.

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

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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