OLDWICK, N.J.–(BUSINESS WIRE)– A.M. Best Co. has placed the financial strength rating of A- (Excellent) and issuer credit rating “a-“ ofForethought Life Insurance Company(FLIC) (Indianapolis, IN) under review with negative implications.
These actions reflect A.M. Best’s concern with FLIC’s decline in statutory capitalization, net loss on a statutory and GAAP basis, its high unrealized loss position and significant level of intangibles relative to its GAAP equity.
The ratings have been placed under review following discussions with FLIC’s ultimate parent company, Forethought Financial Group, Inc. (FFG), about significant new capital raising initiatives. These efforts are expected to improve the capital position of the organization to support growth and offset any additional investment losses. While A.M. Best expects tangible progress in these efforts in the near term, the ratings of FLIC will be negatively impacted should the capital raising efforts be unsuccessful.
FLIC recorded a decline in its reported statutory capital and surplus following investment impairments and net operating losses. These losses were somewhat offset by capital contributions from FFG. A.M. Best notes that FFG was successful in paying down a large portion of its outstanding debt; however, the high level of intangibles and large unrealized losses have stressed FFG’s balance sheet and its exposure relative to equity remains high.
The ratings continue to reflect FLIC’s adequate risk-adjusted capitalization, strong market position in the pre-need segment and the simplification of its organizational structure. FLIC also has taken steps to reduce the investment risk on its balance sheet by employing experienced external asset managers and investing in higher rated credits.
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A.M. Best Co.
Raj Shah, 908-439-2200, ext. 5409
Stephen Irwin, 908-439-2200, ext. 5454
Jim Peavy, 908-439-2200, ext. 5644
Rachelle Morrow, 908-439-2200, ext. 5378
Source: A.M. Best Company