Ratings upgrade a real benefit to Security Benefit, says insurer's boss

Kiley says A rating will boost distribution of annuities; carrier's premiums already on the rise
MAY 14, 2012
Now that Security Benefit Life Insurance Co.'s ratings have been bumped into the A range, chief executive Michael Kiley hopes to get more banks and broker-dealers selling the insurer's annuities. This month, Standard and Poor's raised the carrier's financial strength rating to A-, from BBB+, giving Security Benefit a “stable” outlook. Just last year, the insurer introduced its first fixed indexed annuity through an alliance with Advisors Excel, a field marketing organization, in an arrangement that made that annuity available only to agents working with Advisors Excel. The product was a development that emerged following Security Benefit's acquisition by Guggenheim Partners LLC in 2010. The insurer, which took its share of lumps in the 2008 recession, has been turning around under Guggenheim's ownership. Last year's new indexed annuity and the deal with the FMO helped boost Security Benefit's profile with Standard and Poor's because the carrier is “expanding outside of its historically strong position in the 403(b) market and has also helped diversify its revenue and profitability streams,” according to a May 2 report from S&P credit analyst Jeremy Rosenbaum. Mr. Rosenbaum also noted in the report that premiums at Security Benefit have jumped sharply, reaching $1.6 billion last year — stemming largely from $950 million in sales of the new indexed annuity. That's up from a low of $345 million in 2010. “The challenge has always been that you need an A rating to get distribution, but in order to have the A rating, you need distribution,” Mr. Kiley said in an interview Friday. He noted that now that Security Benefit is in the A range, it can begin expanding its reach to other distributors that look closely at ratings before doing business with life insurers. “We'll have more access to broker-dealers and bank distribution where the A-range rating is essential for getting onto the platform,” Mr. Kiley said. “It will add to a successful run in the fixed-indexed-annuity market.”

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