Ratings affirmed for New York arm of Symetra Life Insurance

Symetra Life Insurance Co. and its New York subsidiary had their ratings from A.M. Best Co. affirmed because of their growth in a difficult economy.
The ratings service affirmed the financial strength rating of “A” (Excellent) and issuer credit ratings (ICR) of “a+” of Symetra, based in Belllevue, Wash., and First Symetra National Life Insurance Co. of New York.
The ratings reflect the organization’s solid liquidity and risk-adjusted capital position, the consistent operating profitability of its four business segments and its continued progress in delivering strong top-line growth despite the difficult economic climate, the ratings service said. The affirmation also reflects that Symetra’s balance sheet carries somewhat less asset risk than many of its similarly rated peers, with limited exposure to the subprime and Alt-A residential mortgage markets.
A.M. Best notes that the investment portfolio’s overall unrealized loss position has narrowed significantly since its peak in the first quarter of this year. The ratings service noted that Symetra maintains a modest level of intangible assets on its GAAP balance sheet relative to its peers.
A.M. Best indicated that offsetting these strengths is the potential for additional asset impairments given the current economic conditions, the company’s increasingly heavy concentration in spread-based and other commoditized product lines, and its exposure to reinvestment risk within its large block of immediate annuities and structured settlements, which accounts for slightly less than one-half of its statutory general account reserves.
Symetra, according to A.M. Best, will continue to be challenged to maintain profitable spreads as the long-term nature of its structured settlement liabilities makes finding suitable investments difficult. The company’s spread-based product concentration is further exacerbated by its recent strong growth in fixed annuity sales, which accounted for nearly 90% of the company’s total product sales during the first half of 2009.
But A.M. Best noted that Symetra continues to execute on its strategies to closely manage its asset/liability duration matching (ALM), which have led to improved cash flow testing results. Additional offsetting factors include concerns over the near-term profitability of the group medical stop loss business, although A.M. Best noted that Symetra has a history of profitability in this product line.


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