Founded in 1907, SBLI is one of the nation’s leading life insurers
A.M. Best announced this month that is has downgraded the Financial Strength Rating of SBLI from A+ (Superior) to A (Excellent). It also adjusted the Long Term Issuer Credit Rating to “a+” from “aa-“. The Credit Ratings outlook has also been revised to stable from negative.
Based in Woburn, SBLI-MA was founded by the Supreme Court Justice Louis Brandeis in 1907. While originally sold through savings banks, as a way to offer life insurance to all, the insurer now offers its products through brokerage as well. The mission of the life insurer, however, remains the same: To provide affordable, dependable, life insurance to all who need it.
Reasoning behind the downgrade
According to AM Best, the downgrade reflects SBLI’s overall profitability, which has been at best modest. The ratings also reflect the life insurer’s strong brand position as a low-cost term life insurance provider offset by additional factors including product concentration, declining surplus and capital trends.
The ratings downgrades reflect SBLI-MA’s overall modest profitability, reliance on reserve financing and modestly lower quality of capital relative to peers. While capitalization is reduced from historical higher levels, risk-adjusted capital remains acceptable for the ratings. A.M. Best notes SBLI-MA’s efforts to diversify its product mix through growth in its BOLI business along with continued geographic expansion outside of Massachusetts. However, the company’s in-force business profile, which is concentrated in term life sales, remains narrow in scope. While A.M. Best views SBLI-MA’s diversified sales growth positively, a more broad-based liability profile and higher returns is not anticipated over the short to medium term.
Earnings have fluctuated in recent periods due to a combination of costs associated with infrastructure investment and new business sales strain along with mortality results, which were pressured by higher claims due to the social security death match industry issue in 2014.