Press Release|Insurance

KBRA Affirms Rating for Catholic Order of Foresters

3 Nov 2023   |   New York


KBRA affirms the A- insurance financial strength rating (IFSR) for Catholic Order of Foresters (COF). The Outlook is Stable.

The rating reflects COF’s balanced business and reserve mix, sound financial flexibility and liquidity, historically solid balance sheet with minimal use of reinsurance, and long-term strategic focus. COF remains focused on writing continuous pay life insurance and growing membership within its current product offerings. COF has a relatively high-quality bond portfolio, and its investment team has demonstrated a solid track record. Historically, COF has built its adequate capital base through years of consistent profitability across its business lines. Near-term operating results have been positive, reversing a multi-year trend of sustained operating losses. Balancing these strengths is COF’s prior trend of operating losses which have unfavorably impacted its capital base. Losses across the last four years ending 2021 have been primarily driven by a sharp decline in net investment income, reserve strain, and operations, namely, COF’s commitment to growing its life business. As a result, risk-based capital (RBC) company action level (CAL) has trended unfavorably and, despite remaining at a level within its targeted range, is below similarly rated peers. Although the majority of the investment portfolio consists of high-quality bonds, COF also has notable exposure relative to adjusted capital to higher-risk assets, including below investment grade bonds, and other invested assets and does accept some liquidity and structural risk. Further, over three-quarters of COF’s annuity fund balance has minimal or no surrender charge protection. Exposure to spread compression within the legacy annuity block has historically been a negative key credit consideration, in KBRA’s opinion. Relatively high guaranteed crediting rates, low new money rates, and a decreasing trend of earned interest spreads have compressed earnings and profitability. However, historical profitability headwinds related to spread compression on its interest sensitive liabilities have somewhat eased driven by the current interest rate environment as reinvestment yields are significantly higher. However, COF across the last 12 months has experienced greater than average annuity outflows which could constrain or mute the opportunity for higher reinvestment yields.

To access rating and relevant documents, click here.

Click here to view the report.



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: 1002602

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