SBLICSecurity Benefit Life Insurance Company
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The primary operating company, SBLIC, reported statutory admitted assets of $9.
Although SBLIC impaired a large portion of the securities that account for its most risky asset exposure, specifically asset-backed securities backed by subprime mortgages, Fitch expects further significant losses to materialize in this and other segments of the company's investment portfolio in the coming quarters.
Fitch's ratings on SBLIC have historically been heavily supported by the company's strong capital position, the foundation of which was a diversified, highly liquid investment portfolio.
Positively, SBLIC has no near-term refinance risk associated with its outstanding debt, which consists of $150 million of surplus notes.
At year-end 2007, SBLIC reported a company action level Risk-Based Capital ratio of 740%.
Fitch currently expects to downgrade the IFS ratings on SBLIC and FSBLIANY by one notch to 'A' and affirm SBLIC's 'F1' short-term IFS rating following the close of the transaction.
SBLIC has experienced lower profitability in recent years as the spread margins on its fixed products and fixed-rate options on its variable products compressed in the low interest rate environment.
Fitch's 'AA-' insurer financial strength rating on SBLIC and its subsidiary, First Security Benefit Life Insurance and Annuity Company of New York (First Security Benefit Life of NY), and its 'F1+' short-term insurer financial strength rating on SBLIC are not affected by today's rating action.
In addition, Standard & Poor's lowered its short-term counterparty credit and financial strength ratings on SBLIC to 'A-1' from 'A-1+' and lowered its subordinated debt ratings on SBLIC's outstanding $50 million 8.
SBLIC is part of the Security Benefit Group (SBG), which is a financial services organization marketing fixed and variable annuities, mutual funds and retirement plans.