A.M. Best Downgrades Issuer Credit Ratings of Primerica Life

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and downgraded the issuer credit ratings (ICR) to "aa-" from "aa" of Primerica Life Insurance Company (PLIC) (Boston, MA) and its subsidiaries, National Benefit Life Insurance Company (New York, NY) and Primerica Life Insurance Company of Canada (Mississauga, Ontario) (collectively known as Primerica Life). The outlook for all ratings is stable. These companies are currently indirect insurance subsidiaries of Citigroup, Inc. (Citigroup) (Delaware) (NYSE: C).

The rating action reflects the fact that the credit profile of Citigroup can no longer support the rating enhancement previously afforded to Primerica Life under A.M. Best's methodology for rating members of insurance groups. Additionally, Citigroup has announced plans to opportunistically sell off assets of Citi Holdings, a recently formed operating segment comprised of non-core businesses that include Primerica Life. This public declaration that Primerica Life is no longer a strategically integral component of Citigroup's ongoing operations would also preclude it from receiving rating enhancement from Citigroup. As a result, the published ratings of PLIC and its subsidiaries now reflect PLIC's stand-alone credit profile.

The ratings of Primerica Life reflect its continued profitable operations, leading position in the U.S. term life insurance marketplace, strong risk-adjusted capitalization and favorable liquidity profile. Primerica Life is one of the largest writers of term life insurance in the United States, and its strong market position is attributable to its dedicated distribution affiliate, Primerica Financial Services, Inc. (PFS). This integrated distribution and operating platform includes nearly 100,000 life agents and is the primary driver of the insurance unit's excellent operating performance.


Partially offsetting these strengths is Primerica Life's operational concentration in commodity term life insurance products and the competitive challenges inherent in the U.S. individual insurance market. Primerica Life's focus on term life insurance products results in concentration risk, as this product line is price-sensitive and profits primarily are based on mortality gains. Additionally, A.M. Best believes that the company's reliance on part-time agents heightens its exposure to market conduct risks.

A.M. Best also notes that should an agreement of sale ultimately be reached for Primerica Life, future rating actions would reflect, among other things, the relative financial strength of the acquiring organization, its post acquisition risk-based capital levels and the materiality of its revenue and earnings contributions to its new parent.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.





A.M. Best Co.

Analysts:

Darian Hala, 908-439-2200, ext. 5802

darian.hala@ambest.com

or

Thomas Rosendale, 908-439-2200, ext. 5201

thomas.rosendale@ambest.com

or

Public Relations:

Jim Peavy, 908-439-2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, 908-439-2200, ext. 5378

rachelle.morrow@ambest.com



Source: A.M. Best Co.