TEXT - Fitch affirms Minnesota Life Insurance Co 'AA-' rating

Thu Jan 24, 2013 10:37am EST

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Jan 24 - Fitch Ratings has affirmed the Insurer Financial Strength (IFS)
ratings of Minnesota Life Insurance Company (Minnesota Life) and its subsidiary,
Securian Life Insurance Company at 'AA-'. Fitch has also affirmed the rating on
Minnesota Life's surplus notes at 'A'. The Rating Outlook is Stable.

The rating affirmation reflects Minnesota Life's strong balance sheet 
fundamentals and conservative risk profile. The ratings also consider the 
company's moderately weak earnings relative to similarly rated peers, as well as
macroeconomic challenges and a strong competitive environment in its core 
markets, within which the company often faces insurers with greater scale and 
resources.

Minnesota Life's strong balance sheet fundamentals reflect the company's solid 
capitalization, low operating leverage, and low financial leverage. The 
company's risk-adjusted capitalization, which is a key factor supporting the 
company's ratings, remained strong and stable in 2012. The company reported a 
risk-based capital (RBC) ratio of 518% of the company action level at Dec. 31, 
2011, and Fitch expects the company to report and RBC ratio in excess of 500% 
for Dec. 31, 2012.

In addition to the company's strong risk-adjusted capitalization, Minnesota 
Life's solid balance sheet fundamentals are supported by its low statutory 
operating leverage of 4.6x as measured by adjusted liabilities to total adjusted
capital, as well as low financial leverage of approximately 5% on a GAAP basis.

Fitch notes that Minnesota Life's liquidity profile continues to be very 
favorable. The company's results benefit from its large, investment-grade, 
publicly traded bond portfolio and stable liability structure.

Minnesota Life's conservative risk profile reflects balanced, diversified 
sources of revenue that serve to moderate earnings volatility, although growth 
in fee income related to capital market performance could add further volatility
in the future. While the company's product lines have produced below average 
combined profitability relative to similarly rated peers, Fitch acknowledges 
that the company's products are reflective of management's mutual insurance 
company philosophy. Fitch also takes a favorable view of Minnesota Life's high 
quality career agency distribution channel and strong technology-based service 
platform, which Fitch considers to be beneficial to its group life and 
retirement services product lines.

Fitch expects Minnesota Life's near-term operating profitability to moderate 
somewhat, as recently favorable mortality experience reverts to historical 
averages. Over the course of 2013, Fitch anticipates the company's profitability
as measured by GAAP-based return on equity to be between 6% and 7%, which is 
within current rating expectations. In addition, Fitch believes that intense 
market competition will continue to challenge the company in its efforts to 
generate profitable top line growth over the next year, and low interest rates 
will likely pressure spread income.

Minnesota Life, the primary operating subsidiary of Securian Financial Group, is
headquartered in St. Paul, Minnesota and reported total admitted assets of 
approximately $28.1 billion and capital and surplus of $2.1 billion at Sept. 30,
2012.

SENSITIVITY/RATING DRIVERS

The key rating triggers that could result in an upgrade include: 

--Sustained strengthening of capitalization, including a company action level 
risk-based capital (RBC) ratio above 600% with strong capital quality;

--Sustained strengthening of financial results, including a GAAP operating 
return on equity of 10% or higher.

The key rating triggers that could result in a downgrade include:

--Significant deterioration in financial results that include sustained GAAP 
operating return on equity below 4%;

--A sustained decline in the company's RBC ratio to a level below 450% and an 
increase in financial leverage above 15% as measured by debt-to-total capital.

Fitch affirms the following ratings with a Stable Outlook:

Minnesota Life Insurance Company

--IFS at 'AA-';
--Issuer Default Rating at 'A+';
--$120 million Rule 144a surplus notes 8.25% due 2025 at 'A'.

Securian Life Insurance Company
--IFS at 'AA-'.
FILED UNDER:
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