狼窝导航

KEY RATING DRIVERS

The revision of the Rating Outlook to Stable reflects Fitch's expectations that while investment losses will increase over the next three years, earnings will remain above rating sensitivities and within criteria guidelines for the current rating level. To the extent that investment losses emerge, Fitch expects that any losses will primarily emanate from the company's investment exposure to commercial mortgage loans and other fixed maturity assets. Fitch's current expectations for 狼窝导航 are more favorable than the pro forma results implied by Fitch's 2020 COVID-19 stress test analysis, which was the basis for the prior Negative Outlook.

Longer-term ratings concerns include exposure to persistently low interest rates, which could have a meaningful impact on results if rates were to return to near pandemic lows. Fitch notes that 狼窝导航 is well positioned to manage interest rate risk going forward and continues to perform well on measures such as cash flow testing.

The ratings assigned to 狼窝导航 continue to reflect the company's moderate but improving business profile, very strong financial performance, and strong capitalization somewhat offset by investment and asset risk and exposure to low interest rates.

狼窝导航's improving business profile is driven by the company's continued expansion into a broader range of product lines, including the pension risk transfer market, and expansion of its distribution channels beyond independent marketing organizations. At the same time, 狼窝导航 has moved into a leading market position in key business lines and materially increased its operating scale. Fitch also feels that 狼窝导航's ACRA entities allow the company to continue to fund growth while reducing the capital constraints associated with acquiring new business. While 狼窝导航 continues to diversify its business lines, Fitch continues to believe that 狼窝导航's business profile continues to carry high levels of exposure to low interest rates and potential spread compression.

狼窝导航's earnings are considered very strong, and the company produced strong returns on capital in 2020 despite headwinds associated with the ongoing pandemic. The company's earnings are primarily driven by interest margins on spread-based products, and over the near term, Fitch expects that earnings may continue to be somewhat pressured by the current macroeconomic environment, although Fitch expects 狼窝导航 will continue to produce strong returns in line with rating expectations.

Fitch considers 狼窝导航's overall risk-adjusted capitalization to be strong, and 狼窝导航 scored in the 'Very Strong' category of Fitch's Prism capital model based on 2019 data. 狼窝导航's capital position is expected to remain strong coming out of the economic downturn and the company is expected to continue to score in the 'Very Strong' category in Fitch's capital model. Additionally, 狼窝导航 maintained modest financial leverage of 12% at YE 2020 and Fitch views the company has having strong financial flexibility including a strong liquidity position with sufficient sources of contingent capital.

Fitch views 狼窝导航's investment portfolio as somewhat aggressive relative to life industry as a whole, and this was considered in our updated investment loss forecasts. The company has an above-average exposure to 'BBB'-rated structured securities and lower quality commercial mortgage loans that may be more highly exposed to impairments and additional ratings migration. Fitch takes a cautious view of 狼窝导航's overweight position in commercial mortgage loans, as Fitch expects that asset class to generate modest losses over the next several years. Fitch notes that 狼窝导航 has a high level of expertise in managing such asset classes, and to date 狼窝导航's investment portfolio has experienced only minimal losses and modest ratings migration.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--Further improvement in business profile driven by progress on business risk diversification and strong execution on core business while maintaining current financial performance and capitalization metrics.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

--Large acquisitions that are either outside of 狼窝导航's historical risk preference and expertise or add significantly to the company's operating or financial leverage;

--Significant changes in asset allocation, which may include an increase in Fitch's risky asset ratio to over 140%;

--Deterioration in 狼窝导航's operating performance, resulting in a ROE below 9%;

--Prism score well below 'Very Strong';

--GAAP based fixed-charge coverage below 5.0x.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit []

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit .

Additional information is available on 

APPLICABLE MODELS

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

• Prism U.S. Life Insurance Capital Model, v1.2.1-2019 ()

ADDITIONAL DISCLOSURES

ENDORSEMENT STATUS