(The following statement was released by the rating agency)
CHICAGO, August 04 (Fitch) Fitch Ratings has affirmed at 'AA-'
Financial Strength (IFS) ratings of Minnesota Life Insurance
Life) and its subsidiary, Securian Life Insurance Company. Fitch
the rating on Minnesota Life's surplus notes at 'A'. The Rating
Key Rating Drivers
The affirmation of Minnesota Life's ratings reflects the
balance sheet fundamentals and conservative risk profile, as
well as improving
earnings. The ratings also reflect macroeconomic challenges and
competitive environment in the company's core markets, within
which the company
often faces insurers with greater scale and resources.
Minnesota Life's strong balance sheet fundamentals reflect the
capitalization, low operating leverage, and low financial
company's risk-adjusted capitalization, which is a key factor
company's ratings, remained strong and stable in 2013. The
company reported a
consolidated risk-based capital (RBC) ratio of 517% of the
company action level
at Dec. 31, 2013, up from 507% at yearend 2012.
In addition to the company's strong risk-adjusted
Life's solid balance sheet fundamentals are supported by its low
operating leverage of 4.6x as measured by adjusted liabilities
to total adjusted
capital, as well as low financial leverage of approximately 3%
on a GAAP basis.
Fitch notes that Minnesota Life's liquidity profile continues to
favorable. The company's results benefit from its large,
publicly traded bond portfolio and stable liability structure.
Minnesota Life's conservative risk profile reflects balanced,
sources of revenue that serve to moderate earnings volatility,
in fee income related to capital market performance could add
in the future. While the company's product lines have produced
combined profitability relative to similarly rated peers, Fitch
that the company's products are reflective of management's
company philosophy. Fitch also takes a favorable view of
Minnesota Life's high
quality career agency distribution channel and strong
platform, which Fitch considers to be beneficial to its group
retirement services product lines.
Fitch expects Minnesota Life's operating profitability to
over the short term. Over the course of 2014, Fitch anticipates
profitability as measured by GAAP-based return on assets to be
near 0.9%. Fitch
anticipates that current low interest rates will continue to
serve as a headwind
to the company's profitability.
Minnesota Life, the primary operating subsidiary of Securian
Financial Group, is
headquartered in St. Paul, Minnesota and reported total admitted
approximately $33.9 billion and capital and surplus of $2.4
billion at March 31,
The key rating triggers that could result in an upgrade include:
--Maintain risk-adjusted capitalization and quality of capital
--No deterioration in statutory or GAAP-based operating results,
return on assets maintained at or above .90% over the next 18
--Continued low financial leverage;
--Continued low asset risk;
--Modest M&A activity.
The key rating triggers that could result in the Rating Outlook
being revised to
--Deterioration in statutory or GAAP-based operating results.
The key rating triggers that could result in a downgrade
--Significant deterioration in financial results that results in
ROA below .60% on a sustained basis;
--A sustained decline in the company's RBC ratio to a level
--an increase in financial leverage above 15% as measured by
Fitch affirms the following ratings with a Positive Outlook:
Minnesota Life Insurance Company
--IFS at 'AA-';
--Issuer Default Rating at 'A+';
--$118 million Rule 144a surplus notes 8.25% due 2025 at 'A'.
Securian Life Insurance Company
--IFS at 'AA-'.
Bradley S. Ellis, CFA
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
Dafina M. Dunmore, CFA
Donald F. Thorpe, CPA, CFA
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (November 2013).
Applicable Criteria and Related Research:
Insurance Rating Methodology
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