AM Best has affirmed the credit ratings of Bermudian-headquartered Global Atlantic Financial Group Ltd and its subsidiaries, including island-based affiliates Global Atlantic Re Ltd and Global Atlantic Assurance Ltd.

The ratings agency affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a+” (Excellent) of Commonwealth Annuity and Life Insurance Company and First Allmerica Financial Life Insurance Company —both of Massachusetts — together with Forethought Life Insurance Company of Indianapolis, Accordia Life and Annuity Company of Iowa, and the two affiliates.

These subsidiaries are referred to collectively as Global Atlantic Group.

AM Best also affirmed the long-term ICR of “bbb+” (Good) of Global Atlantic Financial Group.

The outlook of these credit ratings is stable.

The ratings reflect Global Atlantic’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

In January, KKR & Co Inc completed a transaction to buy the remaining 37 per cent of Global Atlantic in an all-cash deal worth $2.7 billion. KKR now owns 100 per cent of Global Atlantic.

The agency said the rating affirmations reflect Global Atlantic’s favourable balance sheet strength metrics, which are driven by risk-adjusted capitalisation that AM Best has assessed at the strong level, as measured by Best’s capital adequacy ratio, ample liquidity and strong financial flexibility.

AM Best said the investment portfolio is comprised primarily of fixed income instruments including corporate bonds, mortgage loans, structured securities and government securities.

It added that Global Atlantic has experienced double digit growth in the group’s invested assets over the past five years. The main drivers in this growth include an increase in direct business written in the company’s individual markets, as well as large block reinsurance transactions.

AM Best said: “The block transactions introduce some volatility in net premium growth, but the five-year trend is generally positive. The most significant recent block transaction was a $10 billion deal with Manulife Financial Corporation, which includes whole life, annuities, and long-term care policies. The LTC risk was ceded to a highly rated third-party global reinsurer.

“The group’s business profile has grown in the annuity and preneed markets. Global Atlantic has also expanded its presence in the reinsurance space both domestically and internationally. The group utilises several different structures and treaties to provide reinsurance solutions that strengthen the relationships with their clients.

“Global Atlantic continues to utilise their sidecars, Ivy I and Ivy II, as co-investment vehicles. These sidecars help Global Atlantic in providing solutions to its reinsurance clients and provides co-investors with more investment opportunities.

“The group’s ERM programme has continued to grow and adapt, meeting the needs of the group and the larger organisation. AM Best expects the group to maintain its current balance sheet strength assessment and business profile assessment levels, in support of its growth strategy.”