AM Best affirms Knighthead Insurance Group ratings, assigns $75 million note rating
Knighthead Insurance Group keeps its key credit ratings unchanged with stable outlooks as the insurer expands across reinsurance, international annuities and the U.S. annuity market. AM Best also assigns a rating to Knighthead Annuity & Life Assurance Company’s newly issued $75 million surplus notes due 2046, adding to the group’s financing flexibility.
Highlights
- AM Best affirms Knighthead Annuity & Life Assurance Company’s and Merit Life Insurance Co.’s A-/a- ratings with a stable outlook.
- AM Best assigns a “bbb” Long-Term Issue Credit Rating with stable outlook to Knighthead Annuity’s new $75 million, 8.5% surplus notes due 2046.
- Knighthead Insurance Group maintains strongest risk-adjusted capitalization per Best’s Capital Adequacy Ratio, supported by diverse asset allocation and robust U.S. business growth.
Rating action and capital position
As reported by AM Best, the rating agency affirms the Financial Strength Rating of A- and the Long-Term Issuer Credit Rating of “a-” for Knighthead Annuity & Life Assurance Company in the Cayman Islands and affiliate Merit Life Insurance Co. in Charlotte, North Carolina. The outlook on those ratings remains stable, and AM Best assigns a Long-Term Issue Credit Rating of “bbb” to Knighthead Annuity’s newly issued $75 million, 8.5% surplus notes due 2046, also with a stable outlook.AM Best says the ratings reflect the group’s strong balance sheet strength, adequate operating performance, neutral business profile and appropriate enterprise risk management. The agency says Knighthead Insurance Group holds the strongest level of risk-adjusted capitalization under Best’s Capital Adequacy Ratio, supporting a diverse asset allocation and the continued growth of its U.S. business.
The agency notes that Knighthead Annuity holds illiquid credit investments, including rated feeder funds, private loans and structured credit, but says the company also maintains high allocations to cash and public fixed-income instruments to support liquidity. AM Best adds that access to financing through the holding company’s investor base or debt issuance gives the group additional flexibility, while adjusted financial leverage and interest coverage remain favorable.
Sovereign borrowing risks in a higher-rate environment were the focus of our earlier coverage, as persistent geopolitical tensions and elevated fiscal spending continue to strain governments’ refinancing capacity. We noted that emerging and frontier markets are especially exposed because debt-service costs are often high relative to their revenue bases, while inflationary shocks linked to global conflicts can further weaken credit outlooks.
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