AM Best confirms credit ratings of Penn Mutual Life Insurance Company and its subsidiaries

AM Best Affirmed The Penn Mutual Life Mutual Life) (Horsham, PA) and its wholly owned subsidiaries, The Penn Insurance and Annuity Company (Wilmington, DE), Vantis Life Insurance Company (Windsor, CT) and The Penn Insurance and Annuity Company of New York (Brewster, NY ). These companies are collectively referred to as Penn Mutual Group (Penn Mutual). Concurrently, AM Best affirmed long-term issue credit ratings (long-term RI) of “a” (Excellent) on the $200 million, 6.65% excess notes due 2034, and l Long-term IR of “a” (Excellent) on $200 million 7.625% Excess Notes due 2040 issued by Penn Mutual Life. The outlook for these Credit Ratings (ratings) is stable.

The ratings reflect Penn Mutual’s balance sheet strength, which AM Best rates as the strongest, as well as its strong operating performance, favorable business profile and appropriate management of business risks.

Penn Mutual’s risk-adjusted capitalization is considered to be at the highest level, as measured by the Best Capital Adequacy Ratio (BCAR), and is supported by the company’s consistent capital growth over the years and its effectively managed investment portfolio, which contains some built-in increased risks, but continues to deliver favorable net returns relative to industry peers and benchmarks. The balance sheet is further supported by good liquidity indicators and the overall financial flexibility of the organization. The group’s leverage and hedging parameters are quite modest and considered adequate to support its current operations.

Penn Mutual has historically seen favorable growth in its core life insurance products, although more recently this has been offset by stagnant annuity sales due to the pandemic. The company benefits from its diversity in product offerings, distribution capabilities and partnerships, which has led to an increase in market share, although unchanged in 2020. AM Best notes that Penn Mutual benefited positively from its application and underwriting tool, ACE, which gave advisors access to real-time data, especially in today’s challenging environment. Overall, Penn Mutual’s GAAP operating performance improved significantly in 2021, compared to a decline the previous year, due to continued strong sales across many lines of business and additional investment income. In addition, AM Best notes that statutory operating metrics continue to be somewhat stretched, due to sales of certain products, unfavorable mortality and new reserve regulations affecting some increased volatility.

Penn Mutual’s emphasis on risk management reflects its formalized framework, including well-communicated risk appetite and tolerances, multiple-scenario stress testing, and a tightly embedded risk culture at all levels of the organization. organization.

This press release relates to credit ratings that have been published on AM Best’s website. For all rating information relating to the release and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

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