TEXT-Fitch affirms Thrivent Financial for Lutherans IFS rating at 'AA'

Mon Jan 28, 2013 10:53am EST

Jan 28 - Fitch Ratings has affirmed the ratings of Thrivent Financial for
Lutherans (Thrivent Financial) and its subsidiary, Thrivent Life Insurance
Company (Thrivent Life), collectively referred to as Thrivent. The affirmed
ratings include Thrivent's 'AA' Insurer Financial Strength (IFS) and its 'AA-'
long-term Issuer Default Rating (IDR). The Rating Outlook is Stable. A complete
list of rating actions is provided at the end of this release.

Fitch's ratings of Thrivent Financial reflect the organization's strong
capitalization with very low use of financial leverage, high-quality investment
portfolio, consistent profitability and favorable market franchise within the
Lutheran market. In addition, Thrivent has a conservative liability profile with
limited exposure to variable annuities with living benefit guarantees.

The Stable Outlook is driven by Thrivent Financial's strong capital base and
Fitch's expectations of continued sustainable solid operating performance,
supported by conservative investment and product offerings. Fitch believes that
the pressure on profitability and capital, driven by an extended low interest
rate scenario and future investment losses, is manageable in the context of the
company's capital position and liability profile.

Key rating concerns include Thrivent Financial's above-average exposure to risky
assets (below investment-grade bonds, common stocks, schedule BA-other invested
assets and troubled real estate), challenges due to competitive pressures in the
company's core life and annuity markets, and uncertainty tied to difficult
macroeconomic conditions and evolving regulatory environment. Fitch believes
that a prolonged low interest rate environment will increase earnings pressure
due to margin compression for Thrivent and other industry participants in the
annuity and interest-sensitive life insurance business.

Fitch views Thrivent Financial's capitalization as very strong and of high
quality. Total adjusted capital (TAC) increased to $6 billion and a risk based
capital (RBC) ratio of approximately 517% at Sept. 30, 2012, as compared to
year- 2011 TAC of $5.4 billion and RBC of 483%. The company has not issued
surplus notes to support its capital and Thrivent Financial's reliance on
capital markets and reinsurance to finance its product reserves and capital base
is very low. Capital strength is also aided by moderate operating leverage and a
relatively low-risk liability profile.

Profitability for Thrivent Financial is viewed as consistent and good in 2012 as
exhibited in an operating return on capital of 9.4% through the first nine
months of 2012. Thrivent's statutory net income increased 13% for the nine
months of 2012 versus the same period in 2011, reflecting the growing
contributions of the annuity business and the stable results of Thrivent's life
insurance business. Profitability in 2012 has benefited from a growing asset
base, favorable lapse rates for both life and annuity businesses, generally
favorable mortality, and good expense management.

Thrivent manages a high-quality, well-diversified, liquid investment portfolio
that has performed relatively well in terms of credit loss experience and book
yield over the last three years. Realized credit related losses are considered
low at approximately 13 basis points for 2012 and 2011, and well within pricing
assumptions. Fitch expects modest losses again for 2013.

Fitch believes Thrivent Financial is strongly positioned within the Lutheran
market, but that the company's narrow focus presents challenges for long-term
growth opportunities. Fitch notes that Thrivent membership will complete its
April 30, 2013 vote on extending its common bond to include other Christians.
This could over time lead to more members and scale related advantageous if well
executed.

SENSITIVITY/RATING DRIVERS


Factors that could trigger a negative rating action:

--A decrease in estimated RBC below 390%;
--A material increase in realized gross investment losses and impairments;
--Material negative trends in earnings and/or fraternal membership.

Factors that could trigger a positive rating action:

--Sustained profitability with low double-digit returns and profitable growth in
fraternal membership;
--A sustained RBC above 480%.

Fitch has affirmed the following ratings with a Stable Outlook:

Thrivent Financial for Lutherans
--Long-term IDR at 'AA-';
--Short-term IDR at 'F1+';
--IFS at 'AA'.

Thrivent Life Insurance Company
--IFS at 'AA'.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (Jan. 11, 2013).

Applicable Criteria and Related Research:
Insurance Rating Methodology - Amended
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