KBRA Affirms All Ratings for Kuvare

KBRA affirms the A- insurance financial strength ratings (IFSRs) of Guaranty Income Life Insurance Company (GILICO), Kuvare Life Re Ltd. (KLR) and United Life Insurance Company (ULIC), with Stable Outlooks. KBRA also affirms the BBB+ IFSR of Lincoln Benefit Life Company (LBL), with a Negative Outlook. In addition, KBRA affirms the BBB- issuer ratings of Kuvare UK Holdings Limited (KUK) and Kuvare US Holdings, Inc. (KUS), with Stable Outlooks. KBRA also affirms the BB debt rating on KUS’ $225 million Fixed Rate Reset Cumulative Preferred Stock due 2051, with a Stable Outlook. Collectively, the companies are referred to as Kuvare.

Key Credit Considerations

The ratings reflect strong capital management and financial flexibility, comprehensive evolving ERM, a strong liquidity profile, and a well-articulated business strategy. Kuvare has consistently demonstrated an active, disciplined approach to capital management across the platform, using a mix of reinsurance, FHLB/Repo agreements, and holding company liquidity tools to support operating company needs and strategic initiatives. Kuvare’s access to external contingent liquidity and its history of deploying capital where needed underpin financial flexibility. Kuvare continues to formalize and deepen ERM across the organization, with clearer governance, committee oversight, and scenario-based monitoring that improves linkage across the company’s risk appetite, capital planning, and liquidity management. KBRA believes that liquidity is a key strength for Kuvare given the combination of operating company liquidity resources and holding-company backstops, supported by stress testing that explicitly considers policyholder behavior and market shocks. Kuvare’s business strategy is risk-focused and consistently communicated – scale spread-based retail annuity manufacturing/distribution, expand asset-intensive reinsurance with disciplined deployment pacing, and actively manage legacy blocks through risk transfer and runoff optimization.

Balancing these strengths are high operating leverage, material underperformance relative to management’s 2025 yearend forecast, continued structural constraints from legacy exposures, elevated volatility and reduced visibility on the drivers of future earnings, elevated holding company financial leverage, heavy reliance on reinsurance and a competitive annuity (re)insurance market. While capital levels at the operating companies are viewed by KBRA as adequate at the current rating levels, the 2025 results indicate reduced headroom relative to internal risk-based capital targets and reflect an operating model that is structurally levered given the scale of liabilities supported by surplus, reinforcing Kuvare’s reliance on enterprise-level capital support to maintain operating company capitalization. Reported 2025 statutory results for the US operating companies were materially weaker than management’s forecast, reflecting both the concentration and capital management actions at year end with the resulting timing mismatch in statutory reporting whereby near-term earnings and capital impacts were recognized immediately while the expected long-term benefits from the executed reinsurance transactions remain prospective. While KBRA acknowledges that Kuvare executed on its planned balance sheet repositioning, the statutory impact of these actions with respect to earnings and capital was more adverse than expected by KBRA. Legacy exposures remain a structural constraint due to experience volatility and capital intensity, limiting financial flexibility and absorbing management attention. While the recently executed reinsurance transactions are intended to reduce tail risk, their ultimate effectiveness remains subject to execution as well as a longer time horizon and remain a focus of ongoing monitoring by KBRA. In 2025, reinsurance accounting impacts, reserve adjustments and capital management actions resulted in reduced comparability of results across periods and made reported earnings not fully indicative of underlying normalized performance, limiting visibility into sustainable internal capital generation and increasing reliance on forward execution. Holding company leverage and associated fixed charges increase sensitivity to periods of weaker earnings or transaction timing mismatch, particularly if capital needs simultaneously emerge at the operating companies. Even with liquidity tools available, KBRA believes that elevated leverage may become a binding constraint through covenants, refinancing risk, or reduced capacity to downstream capital without increasing debt reliance and remains an important medium-term credit consideration that KBRA will monitor closely. Reinsurance is a core feature of Kuvare’s business model across the platform, supporting capital efficiency, risk shaping, and growth, but it also creates structural dependencies on treaty performance, counterparty strength, collateral mechanics, recapture provisions, and ongoing market capacity/pricing. KBRA remains focused on overall program complexity and reinsurer concentration. Adverse treaty terms, counterparty stress, or reduced reinsurance availability could affect capital, earnings stability, and business momentum, particularly during periods of market strain when reinsurance becomes more expensive or less available. The retail annuity and asset-intensive reinsurance markets remain highly competitive, which KBRA believes can pressure new business pricing, crediting rates, and commissions, and can incentivize riskier asset allocation or looser product terms if not tightly governed. Competition also heightens disintermediation risk in rising-rate environments, underscoring the importance of disciplined product management, distribution economics, and ALM/liquidity controls to defend spreads and avoid adverse selection.

Rating Sensitivities

Sustained execution of reinsurance and capital management actions that durably reduce legacy exposure volatility and capital strain, with demonstrated improvement in statutory earnings stability and capital resilience, sustained improvement in capitalization metrics above internal targets, supported by consistent internal capital generation rather then capital contributions, and/or sustained reduction in financial leverage at the holding company and improved financial flexibility could result in positive rating action.

Continued divergence between management projections and actual results, particularly if earnings and capital do not improve in line with expectations following year end 2025 reinsurance transactions, continued adverse A/E experience at LBL (and its special purpose captive Lancaster Re) or failure of the captive retrocession structure to deliver expected reductions in volatility and capital strain at LBL, weakening capitalization or liquidity, including stress liquidity, market value deterioration, or collateral-driven funding needs, adverse investment outcomes, including execution challenges in private asset deployment or spread compression, governance, model or risk management deficiencies that pressure capital adequacy, and/or increased financial leverage or deterioration in holding company financial flexibility could result in negative rating action.

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