AM Best Upgrades Credit Ratings of Athora Life Re Ltd. and Its Subsidiary

AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a-” from “bbb+” of Athora Life Re Ltd. (Athora Re) (Bermuda) and its subsidiary, Athora Ireland plc (Athora Ireland) (Ireland). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Athora Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also benefit from enhancement due to the support of Athora Re’s parent company, Athora Holding Ltd. (Athora). In AM Best’s view, Athora Re is strategically important to the group as a vehicle for transacting reinsurance business, a significant area of targeted growth for the group, and for centralisation of capital within the group. The ratings of Athora Ireland reflect its strategic importance to Athora Re as a vehicle for writing reinsurance business in the European Union.

The rating upgrades reflect an improvement in AM Best’s view of the financial strength of Athora Re’s ultimate parent company, Athora. The successful acquisition of VIVAT N.V. in April 2020, which was subsequently renamed Athora Netherlands N.V., has significantly reduced the risk associated with execution of the group’s strategy. Athora specialises in the management of guaranteed life insurance business in Europe, and has paid-in equity capital of EUR 3.5 billion and liquid resources of EUR 1 billion in the form of committed equity capital and revolving credit facilities. Athora Re also benefits from its parent’s strategic partnerships with shareholders Athene Holding Ltd., and Apollo Global Management, Inc. (Apollo) which provides investment management services to the group.

Athora Re’s risk-adjusted capitalisation was at the strongest level for year-end 2019, as measured by Best’s Capital Adequacy Ratio (BCAR), but is forecast to decline to the very strong level over the medium term due to planned business growth and increased investment risk. Investment risk is elevated due to the company’s appetite for private credit and alternative investments, though its target of a close-to-zero duration gap and strategic partner Apollo’s significant experience in credit investing partially mitigate this risk.

An offsetting rating factor is the material uncertainty surrounding the scale, timing and commercial terms of future reinsurance transactions. Athora Re’s profitability is not expected to meet the group’s ambitious longer term targets until it builds scale and structures its investment portfolio toward its target asset allocation.

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 pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 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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