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A.M. Best Co. has assigned a financial strength rating of A+ (Superior) and an issuer credit rating of “aa-” to First Berkshire Hathaway Life Insurance Company (FBHL) (New York, NY). The outlook assigned to both ratings is stable.
The ratings reflect FBHL’s adequate risk-adjusted capitalization, the explicit support provided by its affiliate, Columbia Insurance Company, as well as the benefits made available though its ultimate parent, Berkshire Hathaway Inc. FBHL offers annuities principally to fund structured settlements to New York state residents and others desiring fixed annuities issued by a New York-domiciled life insurer.
Offsetting rating factors include FBHL’s limited business profile and a lack of product and investment diversification. Earnings growth also may be pressured due to new business strain and the current low interest rate environment.
Upward rating actions for FBHL could be driven by further integration with the immediate parent company, Berkshire Hathaway Life Insurance Company of Nebraska, and continued new business growth.
Key rating drivers that may lead to negative rating actions include a material deterioration in FBHL’s operating performance, lack of capital support from any parent company or substantial deterioration in its risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR).
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; Understanding BCAR for Life/Health Insurers”; and “Rating Members of Insurance Groups.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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