(The following statement was released by the rating agency)
Feb 20 - Fitch Ratings has assigned initial 'A' Insurer Financial Strength
(IFS) ratings to Wilton Reassurance Company, Wilton Reinsurance Bermuda Limited,
Wilton Reassurance Life Company of New York and Texas Life Insurance Company
(collectively referred to as Wilton Re). At the same time, Fitch has assigned a
long-term Issuer Default Rating (IDR) of 'BBB+' to Wilton Re Holdings Limited.
The Rating Outlook is Stable.
KEY RATING DRIVERS
The ratings are based on Wilton Re's consistent growth in insurance earnings,
balance sheet strength that includes strong capitalization across the operating
subsidiaries, a conservative investment portfolio, ample liquidity and modest
financial leverage. Additionally Wilton Re is led by a team with extensive
industry experience which has helped negate Fitch's concerns about the company's
relatively short operating history.
Fitch believes Wilton Re has taken a disciplined approach to growth reflective
of the experience of the management team and the expectations of the company's
investors. Fitch believes Wilton Re has prudently deployed capital only on
transactions that have consistently met or exceeded its profitability hurdles.
As a result, the company's operating performance to date has compared favorably
Also factored into the rationale is Wilton Re's strategic focus on U.S. life
insurance where mortality risk and lapse risk are generally well understood and
less correlated to financial market performance compared to annuity products.
Wilton Re does not have exposure to variable annuities and more risky insurance
products such as those with enhanced guarantees.
Fitch believes capitalization is strong across Wilton Re's operating
subsidiaries. The company seeks to maintain capitalization at levels in excess
of those held by insurers with similar risk profiles.
Fitch views Wilton Re's investment portfolio as conservative and investment
losses since inception have been minimal. Fixed-income securities comprised 94%
of Wilton Re's invested assets at Sept. 30, 2012. The bond portfolio is high
quality and liquid with 8% below investment-grade (BIG) securities.
Fitch also believes that Wilton Re's liquidity position is sound. The company
currently has cash and liquid assets to meet obligations at the holding company
and operating company levels and a modest amount of debt. Additional sources of
liquidity include a senior revolving credit facility and as a member of the FHLB
of Des Moines Wilton Re has access to additional borrowing capacity.
Offsetting these positives are execution risk associated with pricing and
integrating acquired blocks of business particularly as the size of the
transactions increases; concentration risk since a few large deals can drive
overall operating performance or alter the composition of the company's overall
book of business; and uncertainty regarding the long-term ownership structure of
Factors that could trigger a negative rating action include:
--Financial leverage increases above 25%;
--Large transactions outside the company's historical risk preference or
expertise or any other material changes in risk appetite for the company;
--Sustained drop in the company's risk-adjusted capital position with no plans
or ability to rectify;
--Decline in ROE below 10%;
--A change in regulation that would materially increase or change the company's
current reserving, capitalization or redundant statutory reserve collateral
While Fitch does not anticipate an upgrade in the near term, factors that could
trigger a positive rating action in the longer-term include:
--Continued growth in profitability and successful execution of management plans
and additional seasoning of the company's in-force book of business;
--Maintenance of capital levels at or above current levels on a risk-adjusted
Fitch assigns the following ratings:
Wilton Reassurance Company
Wilton Reinsurance Bermuda Limited
Wilton Reassurance Life Company of New York
Texas Life Insurance Company
--IFS 'A'; Outlook Stable.
Wilton Re Holdings Limited
--Long-term IDR 'BBB+'; Outlook Stable.
(Caryn Trokie, New York Ratings Unit)
(Caryn.Trokie@thomsonreuters.com; 646-223-6318; Reuters Messaging: rm://firstname.lastname@example.org)
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