KBRA Assigns Ratings to SILAC Insurance Company and Sterling Investors Life Insurance Company
10 May 2024 | New York
KBRA assigns BBB insurance financial strength ratings to SILAC Insurance Company ("SILAC") and Sterling Investors Life Insurance Company ("SILIC"). The Outlook for both ratings is Stable.
The ratings reflect solid capitalization with favorable growth trends in capital, a seasoned management team, minimal exposure to disintermediation risk, and expanded distribution with a focus on independent agents. SILAC’s year-end 2023 CAL RBC of 375% is solid and above target levels. Demonstrated growth in capital has been favorable, benefiting from solid earnings as well as significant capital contributions. As SILAC has no legacy annuity business, disintermediation risk is substantially mitigated as all new business since launch remains subject to surrender charges and the company strives to maintain competitive crediting rates. SILAC has also demonstrated growth in its core of independent marketing organizations (IMOs) and agent relationships. Balancing these strengths are strong competition in key product lines, exposure to potential spread compression, reliance on reinsurance and counterparty concentration risk, elevated investment risk, and key person risk. SILAC’s key products are fixed indexed annuities, which have substantial competition from established market participants with strong franchises, broader distribution reach, as well as access to significant capital. Product development is a strength and SILAC is focused on developing additional products to drive sales and maintain market share. The company’s earnings stream is somewhat concentrated and exposed to changes in interest rates and credit spreads. Utilized as part of the company’s strategy to manage strain and scale assets, SILAC is reliant on reinsurance and exposed to concentration risk. Counterparty credit risk is somewhat offset by the strong credit quality of some of its reinsurers as well as active management of reinsurance programs, including the swift recapture of select reserves earlier this year.
SILAC Insurance Company is a life and health insurer that markets annuity products to its target middle market customers across a robust distribution network. Sterling Investors Life Insurance Company, a wholly owned subsidiary of SILAC, is a life and health insurer, with a mix of life, annuity, and individual health business. At both entities, non-annuity legacy business is in run-off and the majority of liabilities are reinsured. Both companies are domiciled in Indiana.
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