A.M. Best downgrades Security Benefit Life

A.M. Best Co. today downgraded Topeka, Kan.-based Security Benefit Life Insurance Co.’s financial strength rating to A- from A. It also lowered the firm’s issuer credit ratings to a- from a. In addition, A.M. Best slashed the ratings on subsidiary First Security Benefit Life Insurance and Annuity Co. of (White Plains) New York in a similar fashion. Oldwick, N.J.-based A.M. Best’s also cut its outlook on both firms to negative from stable. The ratings cuts are based on parent company Security Benefit Corp.’s weakened balance sheet and losses through the first quarter, as well as its high exposure to collateralized debt obligations and the potential for unrealized losses on those securities. Nearly half the structured CDOs held by Security Benefit Corp. are backed by subprime mortgages, and while these securities are performing, they may be impaired if their fair value remains low, A.M. Best noted. Adding to the toll, weak credit and volatile markets may also affect the performance of the firm’s fixed and variable annuity businesses. Additionally, the firm’s recent acquisition of Rydex Investments of Rockville, Md., has left it with a higher level of intangible assets.