A.M. Best Affirms Ratings of Allianz Life Insurance Company of North America and Its Core Subsidiary Business Wire OLDWICK, N.J. -- July 10, 2013 A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a+” of Allianz Life Insurance Company of North America (Minneapolis, MN) and its subsidiary, Allianz Life Insurance Company of New York (New York, NY), collectively known as Allianz Life. The outlook for these ratings is stable. The ratings reflect Allianz Life’s strategic position under its ultimate parent, Allianz Societas Europaea (Allianz SE) (Germany), its leading U.S. market position within the fixed index annuity market, its solid risk-based capital position, well-developed enterprise risk management framework, the decline in its below investment grade bond exposure and unlevered balance sheet with no financial leverage as well as its limited use of operating leverage. The ratings also recognize Allianz SE’s global business profile as a leading financial services company and the diversification benefits provided by its core business segments within life/health, property/casualty and financial services. These factors are partially offset by Allianz Life’s limited business profile, which demonstrates a significant concentration in fixed and variable annuity products, declining premium trends and poor operating performance in its legacy variable annuity block. Allianz’s Life’s legacy variable annuity block continues to produce negative results on an International Financial Reporting Standard basis; however, these losses are declining as the book ages and new business margins improve overall profitability. Additionally, A.M. Best notes that new business margins for all core lines—although positively trending—were relatively modest in 2012 due to low interest rates, and Allianz Life’s operating profile remains significantly correlated to interest rate and equity market risk. However, A.M. Best notes that new business margins are beginning to trend more favorably in response to recently rising interest rates and product refinements. Allianz Life recently has experienced declining premium levels primarily as a result of product de-risking changes made in response to the historically low interest rate environment and increased competition. Positive rating actions for Allianz Life are not expected in the near term. However, negative rating actions could occur if there were a considerable decline in its risk-adjusted capital, operating performance and/or significant deterioration occurs in the financial strength of Allianz SE. Concurrently, A.M. Best has downgraded the FSR to B++ (Good) from A (Excellent) and ICR to “bbb+” from “a” of Allianz Life and Annuity Company (ALAC) (Minneapolis, MN). At the same time, A.M. Best has withdrawn ALAC's ratings in response to management’s request to no longer participate in A.M. Best’s interactive rating process. ALAC’s ratings have been downgraded given that it has not been used for its intended purpose and Allianz SE has not issued new policies since acquiring it in 2007. Currently, there are no plans to do so in the future. The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED. Contact: A.M. Best Co. Colleene Parodi Senior Financial Analyst 908-439-2200, ext. 5095 email@example.com or Rosemarie Mirabella Managing Senior Financial Analyst 908-439-2200, ext. 5892 firstname.lastname@example.org or Rachelle Morrow Senior Manager, Public Relations 908-439-2200, ext. 5378 email@example.com or Jim Peavy Assistant Vice President, Public Relations 908-439-2200, ext. 5644 firstname.lastname@example.org
A.M. Best Affirms Ratings of Allianz Life Insurance Company of North America and Its Core Subsidiary
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