(November 12 – 08:40 ET) – A.M. Best Co. has affirmed the A++ (Superior) rating of Great-West Life Assurance Co., and its strategic subsidiary, London Life Insurance Co. The A++ rating of Great-West Life & Annuity Insurance Co., Englewood, Co., has also been affirmed.

A.M. Best says the rating action follows Great-West’s announced corporate reorganization whereby full ownership of the company’s U.S. subsidiary, Great-West Life & Annuity, is transferred to a newly formed subsidiary of Great-West Lifeco Inc.

Lifeco, an upstream holding company, is ultimately controlled by the Power Corp. of Canada. The spinout of Great-West Life & Annuity will enable the company to operate on a more independent basis, subject only to U.S. regulation.

A.M. Best says the affirmed ratings are based on the group’s financial strength and strong operating performance, financial flexibility, dominant market position in numerous core lines of business, excellent and highly diversified earnings profile and the support of the ultimate parent, Power Corporation of Canada.

According to the ratings agency, both the Canadian and U.S. operations of Great-West Life maintain favorable cost structures and excellent administrative capabilities that provide competitive advantages in their respective markets.

In Canada, A.M. Best says the company’s competitively priced product portfolio facilitates earnings growth. It feels this is enhanced by synergies with Great-West’s London Life subsidiary and its ability to penetrate the smaller case group insurance market.

In the U.S., Great West Life & Annuity enjoys strong market positions in both self-funded medical and dental plans to the small- to medium-sized employers and in the public and non-profit sector. The company’s low-cost administrative services advantage enables it to expand its client base of self-funded plans while providing a stable source of earnings. Growth in its less capital-intensive core business lines has yielded favorable returns, which comprise a major portion of the parent company’s earnings from its insurance operations.

A.M. Best believes Great West’s competitive position will remain because it is a well-managed stock life insurance organization with strong historical operating performance and extensive distribution capabilities.

Despite its strong competitive advantages, A.M. Best believes competition in Canada and the U.S. will continue to intensify in the group’s chosen markets, which could pressure revenue growth and earnings performance. Although Great-West Life & Annuity has a high concentration of business in the group medical line, the company is well positioned to integrate its medical plans with 401(k) retirement programs. In addition, the company’s low cost delivery and services enhance its competitive advantage, as evidenced by its strong foothold in the administration of self-funded plans.

A.M. Best also has affirmed the A (Excellent) rating of Alta Health & Life Insurance Co., Piscataway, N.J., the A++ rating of First Great-West Life & Annuity Insurance Co., Albany, N.Y., and the A+ ratings of the company’s core HMO subsidiaries operating as One Health Plans.
-IE Staff