Outlook downgraded for Kuvare Re affiliate

AM Best has revised the outlook of Lincoln Benefit Life Company (LBL ) to negative from stable, while affirming its financial strength rating of B++. 

LBL is an affiliated company of Bermuda-based Kuvare Life Re, which had its A- rating and stable outlook affirmed. Both companies are associated with the Kuvare Retail Group, which also includes Guaranty Life Insurance Company and United Life Insurance Company.

The Kuvare Retail Group had a $250 million capital injection from Blue Owl Capital in 2024. 

AM Best said the ratings of LBL reflected its balance sheet strength, which AM Best assessed as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings of Kuvare Retail Group reflected its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

“Additionally, the ratings of Kuvare Re reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM,” AM Best said. 

AM Best said the Long-Term ICR downgrade and negative outlooks of LBL’s ratings recognise the continued capital support required for its captive reinsurer, Lancaster Re Captive Insurance Company, and the resulting impacts that is expected to have on LBL’s capital flexibility moving forward. 

“Deterioration in the company’s capital trends is due to underperformance in its runoff universal life with secondary guarantees (ULSG) business beyond initial projections,” it said. “Mitigating factors include the expectation for profitability as the ULSG business approaches its peak reserve in the coming years.”

The ratings agency said the ratings of Kuvare Retail Group recognise its solid operating improvements over the last several years, including premium growth in its key annuity products and stable operating profile with favourable operating returns. 

AM Best also noted the recent key initiatives that have improved capitalization and leverage, including the launch of a sidecar, and Blue Owl Capital’s 2024 investment. 

“Offsetting rating factors include the impact of new business strain on operating results and capital. Additionally, GILIC’s reserve book is heavily weighted in interest sensitive reserves with a concentrated product profile. AM Best also recognises the high use of reinsurance including external and affiliated entities,” the agency said. 

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