Press Release|Insurance

KBRA Affirms Rating For GCU

23 Jan 2024   |   New York


KBRA affirms the insurance financial strength rating (IFSR) of A- for GCU, a fraternal benefit society domiciled in Beaver, Pennsylvania. The Outlook is Stable.

The rating reflects GCU’s continued favorable growth trends in surplus and overall capital base that remain underpinned by its demonstrated, consistent trends of profitability. The company’s balance sheet and membership base continue to grow despite a depressed interest rate environment for much of the last decade as well as unfavorable trends in the fraternal industry. GCU has historically successfully demonstrated its ability to adjust crediting rates and maintain relatively healthy spreads. While spreads have compressed more recently, financial results remain favorable. The company remains focused on controlled, strategic growth of its suite of products, particularly its fixed indexed annuity product. Writings of whole life and final expense product continue to increase year over year as well. Balancing these strengths is GCU’s noteworthy exposure to spread compression within its legacy annuity block due to moderately high minimum guaranteed crediting rates, particularly given the current rate environment, increased disintermediation risk, and an increasingly competitive landscape. Although manageable, the company’s investment portfolio has notable exposure to reinvestment and credit risk; however, the higher interest rate environment provides a more favorable setting to replicate GCU’s historical trend of robust returns. GCU’s business mix ultimately remains concentrated as reserves are almost entirely interest sensitive. While increased life sales is a strategic focus, material expansion of its geographic reach and diversification of business mix will more likely occur over the medium to long term.

To access rating and relevant documents, click here.

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Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1002947

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