AM Best has removed from under review with negative implications and downgraded the Financial Strength Rating to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings to “a” (Excellent) from “aa-” (Superior) of Prudential Annuities Life Assurance Corporation (PALAC) (Scottsdale, Arizona). The outlook assigned to these Credit Ratings (ratings) is stable.
AM Best Removes From Under Review
The ratings reflect PALAC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The ratings of PALAC were placed under review with negative implications on Sept. 17, 2021 following the announcement that Fortitude Group Holdings, LLC (Fortitude) and Prudential Financial, Inc. (Prudential) had entered into a definitive agreement for Fortitude to acquire a portion of Prudential’s in-force legacy variable annuity block and acquire PALAC. The negative implications status reflected that PALAC would no longer benefit from the financial strength of Prudential. The transaction between Fortitude and Prudential closed on April 1, 2022. Fortitude intends to change the name of the entity to Fortitude Life Insurance & Annuity Company (FLIAC), subject to receipt of applicable regulatory approvals, including from the Arizona Department of Financial Institutions.
The sale included approximately $31 billion of in-force variable annuity account values, primarily consisting of non-New York, traditional variable annuities with guaranteed living benefits that were issued by PALAC prior to 2011. Prudential will continue to service and administer all contracts in the block. AM Best will continue to monitor the risk-adjusted capitalization of Fortitude and the integration of PALAC/FLIAC given this transaction, but it is not expected to change AM Best’s balance sheet strength assessment in the short term.