A.M. Best Co. has assigned a financial strength rating of A+ (Superior) to First British American Reinsurance Company (FBARC).
The rating outlook for the South Carolina special purpose financial captive is stable.
FBARC was formed toabsorb Triple X reserve strain for guaranteed level term life products fromLegal & General America, Inc. (LGA).
LGA is comprised of Banner LifeInsurance Company (Rockville, MD) and William Penn Life Insurance Company ofNew York (Garden City, Long Island), whose financial strength ratings of A+(Superior) are unaffected.
LGA is a wholly owned subsidiary of Legal &General Group plc, a leading UK based financial services organisation.
FBARC was created for the purpose of using the capital markets to fund thegrowing Triple X reserve requirements within LGA.
Furthermore, thissecuritisation allows LGA to avoid letter of credit capacity/pricingconcerns since FBARC collateralises its obligations to LGA by placing fundsin a separate reserve credit trust.
FBARC's issuance of surplus notes isfunded using money market securities wrapped by a AAA financial guarantor.
Best said it views this transaction as a reasonable mechanism to proactivelyaddress the "humpbacked" capital strain over time, driven by futurereserving requirements for guaranteed level term life products.
Best said it believes FBARC's capitalisation is more than sufficient to meet anyobligations for the excess statutory reserves being assumed from LGA.