KBRA has assigned BBB insurance financial strength ratings to SILAC Insurance Company (“SILAC”) and Sterling Investors Life Insurance Company (“SILIC”), with a Stable Outlook for both ratings.
These ratings reflect robust capitalization and positive growth trends in capital, supported by an experienced management team, limited exposure to disintermediation risk, and expanded distribution channels focusing on independent agents. SILAC’s CAL RBC ratio of 375% at year-end 2023 surpasses target levels, showcasing solid capitalization bolstered by strong earnings and significant capital injections. With no legacy annuity business, SILAC mitigates disintermediation risk, as new business remains subject to surrender charges, alongside efforts to maintain competitive crediting rates. The company has shown growth in its core of independent marketing organizations (IMOs) and agent relationships.
However, these strengths are counterbalanced by intense competition in key product lines, potential spread compression, reliance on reinsurance, and counterparty concentration risk. SILAC’s primary products, fixed indexed annuities, face substantial competition from established market players with broader distribution and significant capital. While the company excels in product development to drive sales and market share, its earnings are somewhat concentrated and vulnerable to interest rate and credit spread fluctuations. Moreover, SILAC’s reliance on reinsurance exposes it to concentration risk, though this is mitigated by active management of reinsurance programs.
SILAC Insurance Company targets middle-market customers with annuity products through a robust distribution network, while Sterling Investors Life Insurance Company, its wholly owned subsidiary, offers a mix of life, annuity, and individual health business. Both entities have non-annuity legacy business in run-off, with the majority of liabilities reinsured.
For detailed rating information and relevant documents, visit the provided links.
Methodologies used for these ratings include the Insurance: Insurer & Insurance Holding Company Global Rating Methodology and the ESG Global Rating Methodology. Further disclosures and information on key credit considerations are available in the full rating report.
KBRA, a full-service credit rating agency, is registered with the U.S. Securities and Exchange Commission and designated as a rating organization by regulatory bodies in various jurisdictions. For more information on KBRA’s policies, methodologies, and disclosures, visit www.kbra.com.
