AM Best Downgrades Issuer Credit Rating of EquiTrust Life Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has downgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to “bbb” from “bbb+” and affirmed the Financial Strength
Rating of B++ (Good) of EquiTrust Life Insurance Company (EquiTrust)
(Chicago, IL). The outlook of these Credit Ratings (ratings) is stable.

The Credit Ratings (ratings) reflect EquiTrust’s balance sheet strength,
which AM Best categorizes as adequate, as well as its strong operating
performance, neutral business profile and appropriate enterprise risk
management.

The Long-Term ICR downgrade reflects a weak Best’s Capital Adequacy
Ratio (BCAR) score, high asset concentrations and a lack of visibility
into the holding company. The decline in risk-adjusted capital reflects
historically high dividend payout ratios, a high level of riskier asset
classes and balance sheet growth that has outpaced capital growth.
Additionally, EquiTrust’s product portfolio is narrow, with a heavy
focus on the competitive fixed indexed and multi-year guarantee (MYGA)
annuity markets. AM Best will monitor management’s intention to
proactively monitor its BCAR scores while reducing dividend support to
its parent in order to allow future capital and surplus to grow and
support an improved risk-adjusted capital position.

Offsetting rating factors include favorable operating performance
relative to peers with stable spreads, as management has been
disciplined in reducing MYGA sales in the highly competitive market
given modest spreads. EquiTrust has an inforce annuity book that is
well-protected against disintermediation risk through market value
adjustments and surrender charge protection. EquiTrust also has been
improving its product diversification through an increased focus on
indexed universal life, although concentration in this line remains
modest. Additionally, EquiTrust has been proactive at addressing expense
efficiencies to improve its operating profile.

This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best’s Credit Ratings
. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view
Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases
.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Erik Miller
Associate Director
+1 908 439
2200, ext. 5187

[email protected]

Rosemarie
Mirabella

Director
+1 908 439 2200, ext. 5892
[email protected]

Christopher
Sharkey

Manager, Public Relations
+1 908 439
2200, ext. 5159

[email protected]

Jim
Peavy

Director, Public Relations
+1 908 439
2200, ext. 5644

[email protected]

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