A.M. Best Affirms Ratings of Symetra Financial and Subsidiaries

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Sep 23, 2009 (Close-Up Media via COMTEX) -- SYA | Quote | Chart | News | PowerRating -- A.M. Best Co. reported it has affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of "a+" of Symetra Life Insurance Company (Symetra Life) (Bellevue, WA) and its subsidiary, First Symetra National Life Insurance Company of New York (New York, NY).

Concurrently, A.M. Best has affirmed the ICR of "bbb+" and debt ratings of "bbb+" on $300 million of 6.125 percent senior unsecured notes, due 2016 and "bbb-" on $150 million of fixed-to-floating rate unsecured junior subordinated notes due 2067 of Symetra Financial Corp. (Symetra) (Delaware). The outlook for all ratings is stable.

The ratings reflect the organization's solid liquidity and risk-adjusted capital position, the consistent operating profitability of its four business segments and its continued progress in delivering top-line growth despite the difficult economic climate. The ratings also reflect that Symetra's balance sheet carries somewhat less asset risk than many of its similarly rated peers, with limited exposure to the subprime and Alt-A residential mortgage markets. A.M. Best notes that the investment portfolio's overall unrealized loss position has narrowed significantly since its peak in first quarter 2009. Moreover, Symetra maintains a modest level of intangible assets on its GAAP balance sheet relative to its peers.

Offsetting these strengths is the potential for additional asset impairments given the current economic conditions, the company's increasingly heavy concentration in spread-based and other commoditized product lines, and its exposure to reinvestment risk within its block of immediate annuities and structured settlements, which accounts for slightly less than one-half of its statutory general account reserves. Symetra will continue to be challenged to maintain profitable spreads as the long-term nature of its structured settlement liabilities makes finding suitable investments difficult. The company's spread-based product concentration is further exacerbated by its recent growth in fixed annuity sales, which accounted for nearly 90 percent of the company's total product sales during the first half of 2009. However, A.M. Best notes that Symetra continues to execute on its strategies to closely manage its asset/liability duration matching (ALM), which have led to improved cash flow testing results. Additional offsetting factors include concerns over the near-term profitability of the group medical stop loss business, although A.M. Best notes that Symetra has a history of profitability in this product line.

Symetra's financial leverage remains moderate, with a pro forma adjusted debt-to-capital ratio (excluding accumulated other income) of approximately 20 percent, incorporating some equity credit for its $150 million of hybrid securities. In addition, interest coverage is solid and is projected to remain within A.M. Best's guidelines for the group's current ratings.

More Information:

http://www.ambest.com/ratings.

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