AM Best Confirms Thrivent Financial Credit Ratings for Lutherans
OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best confirmed the financial strength rating of A ++ (superior) and the long-term issuer credit rating (long-term ICR) of “aa +” (superior) of Thrivent Financial for Lutherans (Thrivent) (head office in Minneapolis, MN). The outlook for these credit ratings (ratings) is stable.
The ratings reflect the strength of Thrivent’s balance sheet, which AM Best considers to be the strongest, as well as its strong operational performance, favorable business profile and very good enterprise risk management (ERM).
The ratings recognize Thrivent’s favorable persistence of its loyal member base and its efforts to continue to grow despite the difficult economic environment. Thrivent maintains a diverse and well-managed product portfolio that aims to complement the needs of its customers throughout their lifecycle. As a result, it maintains some exposure to higher risk product lines, including long-term care and variable annuities, although variable annuity risk with guaranteed living benefits represents a relatively small share of total business. in force of the company. The company continues to diversify its portfolio to meet client needs and recently added Retirement Choice variable annuities to complement its diversification. Thrivent’s reserves are focused on ordinary life, which AM Best sees as a more solvent liability profile. Thrivent maintains a high quality capital structure, which uses no debt and no financial reinsurance or affiliated captives to house redundant reserves. Additionally, its Best Capital Adequacy Ratio (BCAR) continues to be maintained at the highest level, and Thrivent uses a sophisticated ERM program to manage and report risks, which includes a multitude of stress testing scenarios. accompanied by a clear action plan. Thrivent’s ERM program has helped it weather the headwinds of the COVID-19 pandemic over the past year.
Compensating scoring factors include continued losses within its legacy long-term care block, which includes a small portion of its portfolio. Additionally, Thrivent maintains a slightly high level of Schedule BA assets and commercial mortgages as a percentage of total assets, which it has managed well during the pandemic. In addition, Thrivent has a high percentage of interest rate sensitive reserves and an above average percentage of annuities without surrender charge protection. This exposes Thrivent to spread compression given the persistent low interest rate environment and the risk of disintermediation within its annuity block should interest rates rise significantly.
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