AM Best has upgraded the credit ratings of two subsidiaries of Bermuda-based Talcott Financial Group and has affirmed the ratings of an island-based entity.

The ratings agency upgraded the financial strength rating to A- (Excellent) from B++ (Good) and the long-term issuer credit ratings to “a-” (Excellent) from “bbb+” (Good) for Talcott Resolution Life Insurance Company and Talcott Resolution Life and Annuity Insurance Company, both of which are domiciled in Hartford, Connecticut.

Concurrently, AM Best affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Talcott Life Re Ltd (Bermuda).

These companies are collectively referred to by AM Best as Talcott Financial Group.

Additionally, AM Best affirmed the Long-Term ICR of “bbb-” (Good) of Talcott Resolution Life Inc of Delaware, along with its Long-Term Issue Credit Ratings. The outlook of these credit ratings is stable.

The ratings reflect TFG’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.

AM Best said TFG has established itself quickly as a major player in the life and annuity reinsurance space with several large transactions completed since the group was acquired by Sixth Street, a global investment firm, in June 2021.

The group has remained in a favourable risk-adjusted capital position, as measured by Best’s capital adequacy ratio, bolstered further by a strong liquidity framework that can provide substantial funds under several key economic stress scenarios.

AM Best notes that TFG’s ERM framework is well-established and continues to evolve with emerging risks.

While no transactions have been initialised in 2023, the agency said, the growth provided by deals over the previous two years has the group managing approximately $123 billion in assets, with operational gains beginning to be realised when removing for asset value fluctuations driven by the rise in interest rates.

While TFG operates in a very competitive market environment, AM Best believes that TFG will remain well-capitalised and will maintain its current business strategy of growing its platform, by providing risk-transfer solutions to the insurance industry through reinsurance or legal entity acquisitions.