September 24, 2012 / 5:20 PM / 5 years ago

TEXT-Fitch affirms Symetra's ratings; outlook stable

5 Min Read

Sept 24 - Fitch Ratings has affirmed its ratings on Symetra Financial Corp.
 (Symetra), including the Issuer Default Rating (IDR) at 'A-' and all
outstanding debt issues, as well as the 'A+' Insurer Financial Strength (IFS)
rating of the company's lead life insurance subsidiary, Symetra Life Insurance
Company (Symetra Life). The Rating Outlook is Stable. A full list of rating
actions follows at the end of this release.

Symetra's ratings reflect the company's solid balance sheet, consistent
earnings, moderate financial leverage and lower risk products. Additional
strengths include the company's good competitive position in the group medical
stop-loss market and fixed annuities sold through banks. Symetra's products are
less complex than many of its life and annuity peers.

The ratings also consider Symetra's lack of significant scale and product
diversity relative to other highly rated life insurers. Fitch considers
Symetra's reliance on its niche group medical stop-loss business which generates
a major source of earnings (29% in 2011), as a concentration risk. This
concentration may decline in 2012 as the company looks for growth opportunities
in group life and expands its annuity distribution.

Fitch has maintained the Stable Outlook based primarily on expectations that key
credit metrics, including earnings, will remain at or above current levels over
the next 12 to 18 months. Longer term, Fitch is concerned with the earnings
implications of a prolonged low interest rate environment as spreads between
earned rates and credited rates narrow.

Fitch favorably views Symetra's balance sheet strength and asset quality. The
company's estimated June 30, 2012, NAIC risk-adjusted capital (RBC) ratio of
474% is considered by Fitch to be strong and is higher than the median of most
of its similarly rated peers. The company's fixed income portfolio has avoided
concentrations in troubled asset classes and had less than 6% exposure to below
investment grade securities at mid-year 2012. Symetra's commercial mortgage loan
portfolio is sizable and growing at 13% of invested assets, but has performed

Fitch also considers uncertainty surrounding the 2014 implementation of health
exchanges and the individual mandate anticipated as part of the Health Reform
bill (PPACA). Given the myriad of issues that have yet to be resolved, the new
law has the potential to expand the market for the company's group product but
some down side scenarios exist that shrink the marketplace or eliminate existing
customers as well.

Rating triggers that could lead to an upgrade would be achieved over an extended
period of time, and include enhanced profitability to double digit levels,
successful execution of its product diversification strategy and maintenance of
strong capital levels in excess of 450% RBC. Financial leverage, fixed charge
coverage and operating company leverage would need to be maintained near current
levels or improved.

Key rating triggers that could lead to a downgrade include any deteriorating
operating company or holding company capitalization sustained below 375% Company
Action Level (CAL) Risk Based Capital (RBC), an increase in financial leverage
above 25% or a decline in GAAP based fixed charge coverage to below 8 times on a
sustained basis. Material realized or unrealized losses in the company's
long-duration bond portfolio derived from sudden changes in market conditions,
spiked interest rate levels and credit spreads that lead to significant earnings
pressure or cash flow stresses would likely add negative rating pressure.

Fitch has affirmed the following ratings with a Stable Rating Outlook:

Symetra Financial Corp.
--IDR at 'A-';
--6.125% senior unsecured notes due April 1, 2016 at 'BBB+';
--8.3% junior subordinated CENts due Oct. 15, 2067 at 'BBB-'.

Symetra Life Insurance Company
--IFS at 'A+'.

First Symetra National Life Insurance Company of New York
--IFS at 'A+'.
Additional information is available at ''. 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', dated Sept. 19, 2012.

Applicable Criteria and Related Research:
Insurance Rating Methodology

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