OLDWICK, NJ, July 21, 2023–(BUSINESS WIRE)–AM Best affirmed the financial strength rating of A+ (Superior) and the long-term issuer credit rating (Long-term ICR) of “aa” (Superior) of Pacific Life Insurance Company and Pacific Life & Annuity Company (collectively, Pacific Life Group). Both companies are headquartered in Newport Beach, California. In addition, AM Best confirmed the long-term ICR of “a” (Excellent) for the group’s intermediate holding company, Pacific LifeCorp (Wilmington, DE). AM Best has also affirmed Pacific LifeCorp’s long-term credit ratings (long-term IR). The outlook for these credit ratings (ratings) is stable. (See below for a detailed list of long-term and short-term IRs.)
The ratings reflect Pacific Life Group’s balance sheet strength, which AM Best rates as the strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).
Pacific Life Group’s balance sheet is supported by its very high level of risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), and track record of positive earnings trends, which are supported by being one of the industry’s leading selling organizations in several of its key product lines. The favorable business profile rating reflects the group’s importance as a leader in many market segments and is considered one of the top underwriters of life insurance and annuities, holding market leading positions in universal life, indexed universal life, variable universal life, fixed annuities, variable annuities and structured settlements product lines.
The group’s earnings profile benefits from the diversification of its consumer markets, institutional segments and reinsurance, with greater diversification among the variety of offerings in each segment. The ratings also reflect the group’s robust ERM programme, which places a strong emphasis on protecting the balance sheet against extreme event risks and capital market movements.
The group’s earnings are correlated to financial markets given its exposure to interest rate and market rate sensitive reserves, which it partially mitigates through comprehensive hedging programs and a long-term trend of de-risking through product design. AM Best notes that 2022 earnings were positively impacted by investment performance, including wider spreads. AM Best will continue to monitor trends in Pacific Life Group’s operating performance, as well as increasing exposures to commercial mortgage investments, NAIC Class 2 bonds and private placements.
The following long-term IRs have been confirmed with a stable outlook:
— “a” (Excellent) on $600 million 6.60% senior unsecured notes due 2033
($567 million outstanding as of 12/31/2022)
— “a” (Excellent) on $500 million 5.125% senior unsecured notes due 2043
($405 million outstanding as of 12/31/2022)
— “a” (Excellent) on $750 million 3.35% senior unsecured notes, due 2050
($745 million outstanding as of 12/31/2022)
Pacific Life Insurance Company-
— “a+” (Excellent) on $150 million of 7.9% excess notes, due 2023
($134 million outstanding as of 12/31/2022)
— “a+” (Excellent) on 9.25% Excess $1 Billion Notes Due 2039
($300 million outstanding as of 12/31/2022)
— “a+” (Excellent) on $750 million of 4.3% excess notes, due 2067
($749 million outstanding as of 12/31/2022)
The following short-term IR has been confirmed:
Pacific Life Insurance Company-
— AMB-1+ (Strongest) on commercial paper
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 relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit AM Best’s Recent Rating Activity web page. For more information on the use and limitations of credit rating opinions, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to the Proper Use of Best’s Ratings and Ratings.
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 more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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