Fitch Ratings has affirmed Fitch has also affirmed all other ratings assigned to New York Life and certain subsidiaries. A full list of ratings follows at the end of this release. The Rating Outlook is Stable.
KEY RATING DRIVERS
The rating reflects New York Life's extremely strong balance sheet fundamentals, very strong operating profile, and favorable financial performance in line with rating expectations.
The Stable Outlook is driven by Fitch's expectations of sustainable solid operating and investment performance and very strong financial and operating profiles. Fitch believes that the pressure on profitability and capital driven by an extended low interest rate scenario is manageable in the context of the company's capital position and liability profile.
Key rating concerns include New York Life's above-average exposure to risky assets and uncertainty tied to challenging macroeconomic conditions and evolving regulatory environment.
Extremely strong balance sheet fundamentals reflects New York Life's extremely strong statutory capitalization, low financial leverage, very stable, long duration liability profile, and favorable investment profile. New York Life reported strong growth in total adjusted capital, increasing 7.5 percent to
Fitch views New York Life's financial leverage as low and debt service capacity as very strong. Financial leverage declined modestly as total surplus notes as a percent of total adjusted capital decreased to 9.5 percent at
New York Life's risky assets as a percentage of total adjusted capital are above industry averages as a part of New York Life's investment strategy. The company's ALM strategy matches a diversified portfolio of limited partnerships and other private equity investments with participating business lines. New York Life's well-diversified, liquid investment portfolio has performed well through the first nine months of 2013. Investment-related impairments are expected to be low in 2013.
New York Life's very strong operating profile reflects the company's leading position in the U.S. life insurance and annuity markets, diversified business mix, and low-risk product strategy. Key competitive strengths include the company's strong brand name, well-established market positions, and effective career distribution system that targets the middle market. The company's sales and in- force business is concentrated in products with more predictable cash flows and more limited guarantees, and includes individual participating whole life insurance, income annuities, and variable annuities without aggressive living benefit guarantees.
In recent years, New York Life has made good progress exiting underperforming non-U.S. insurance businesses. At this point, the primary insurance business located outside the U.S. is in
Fitch considers New York Life's profitability measures as moderate for the rating but favorable on a risk-adjusted basis considering the company's product profile and operating strategy. Statutory profitability has been generally favorable versus its highly rated peer group.
Fitch believes that New York Life's exposure to potential economic headwinds and the low interest rate environment is manageable, with modest impact on earnings and capital over the near term due to a conservative product profile. Lower interest rate levels over the intermediate term would decrease product margins, as well as pressure defined benefit costs.
The ratings on
In the event that Fitch downgrades the credit rating of
New York Life's IFS ratings are currently at Fitch's highest level. Key ratings triggers that could result in a downgrade include:
--A material weakening of operating company risk based capital ratio to below 425 percent through either declining asset quality or aggressive growth;
--The company encountering a significant level of near-term earnings volatility that is outside the historical average;
--Future increases in financial leverage to over 15 percent on a sustained basis, or a reduction in GAAP based, EBIT fixed-charge coverage below 6x;
--A decrease in the financial flexibility associated with the company's participating whole life business;
--An unexpected shift in tax, regulatory or market dynamics that weakens New York Life's competitive strengths;
--A greater than one notch downgrade of the sovereign rating of
Fitch has affirmed the following ratings with a Stable Outlook:
--Long-term IDR at 'AA+';
--IFS at 'AAA';
--Short-term IDR at 'F1+';
--IFS at 'AAA'.
--Commercial paper at 'F1+'.
--Program rating at 'AAA'.
--Program rating at 'AAA'.
Additional information is available at fitchratings.com.
--'Insurance Rating Methodology' (
Insurance Rating Methodology - Effective
((Comments on this story may be sent to email@example.com))
Fitch Ratings has affirmed
Fitch has also affirmed all other ratings assigned to New York Life and certain subsidiaries. A full list of ratings follows at the end of this release. The Rating Outlook is Stable.