RATING ACTION COMMENTARY
Fitch Affirms Wilton Re’s Ratings; Outlook Stable
Wed 11 Aug, 2021 – 9:58 AM ET
Fitch Ratings – New York – 11 Aug 2021: Fitch Ratings has affirmed the ‘A+’ (Strong) Insurer Financial Strength (IFS) ratings of Wilton Reassurance Company, Wilton Reinsurance Bermuda Limited (WREB), Wilton Re Overseas Limited, Wilton Reassurance Life Company of New York, Texas Life Insurance Company, Wilcac Life Insurance Company and ivari (collectively Wilton Re). Fitch has also affirmed the Long-Term Issuer Default Rating (IDR) of Wilton Re Ltd. at ‘A-‘. The Rating Outlook is Stable.
KEY RATING DRIVERS
Wilton Re’s ratings reflect its moderate business profile and strong capitalization. Fitch’s view of the company’s business profile considers Wilton Re’s strong presence in the administrative reinsurance market. In recent years, the company’s capitalization and financial results have generally been strong and in line with rating expectations. However, investment risk has increased materially as part of an updated strategic asset allocation, and Fitch expects it to increase further over the rating horizon.
Fitch rates Wilton Re’s IFS two notches higher than its standalone credit profile of ‘A-‘ due to its ownership by CPP Investments. The ownership uplift considers the defined linkage to CPP Investments as a result of Wilton Re’s debt including change of control provisions. Additionally, Fitch believes that CPP Investments improves the company’s financial flexibility and has demonstrated its willingness to support growth, contributing significant equity capital to finance the purchase of ivari and previously to refinance Wilton Re’s excess reserve financing arrangement. Fitch views Wilton Re as a noncore subsidiary of CPP Investments but an important platform investment. In recent years, given its excess capital position compared to target levels, Wilton Re has returned capital to CPP Investments….