Fitch Ratings has assigned Insurer Financial Strength (IFS) ratings of 'A+' to
The Rating Outlook is Stable.
Key Rating Drivers
The 'A+' IFS rating reflects application of the Captive Insurance Companies rating methodology contained within Fitch's Insurance Rating Criteria and Fitch's assessment that ACRA 2 meets the standards to be considered a Core Captive. As a result, Fitch has assigned the IFS rating of Athene's insurance operating subsidiaries to ACRA 2. The ratings assigned to ACRA 2 are consistent with those assigned to Athene's previously established ACRA entities.
Fitch's treatment of ACRA 2 as a core captive is driven by Athene's strong willingness and ability to support the entities. In addition, ACRA 2's mission and strategic goals are intricately tied to Athene's while also serving a clear economic purpose. ACRA 2 will derive 100% of its business from Athene through reinsurance from Athene's existing operating subsidiaries.
ACRA 2 is a
Similar to Athene's existing ACRA entities, ACRA 2 will reinsure qualifying transactions from Athene to support growth in Athene's core business, although Athene will retain the ultimate liability for the policies. Qualifying transactions include substantially all new inorganic transactions, pension group annuity transactions, funding agreement transactions and certain flow reinsurance transactions and retain annuity business. In connection with each qualifying transaction that ACRA 2 elects to participate, ACRA 2 will draw the required capital from ALRe and
Future capital needs to support the business may be drawn from both Athene and
Fitch views Athene's ability to voluntarily recapture business ceded to ACRA 2, should ACRA 2's capital fall below certain defined thresholds, as critical to its ability to provide support. Athene's ability to execute this support mechanism does not require approval of
Underperformance of the business ceded to ACRA could lead to capital strain at Athene. Such risks are reflected in Athene's ratings and may become more pronounced as the amount of business ceded to Athene's ACRA entities grows.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
An upgrade of Athene's IFS ratings may result in an upgrade if Fitch's view of the parent's willingness and ability to support ACRA 2 has not changed.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of Athene's IFS rating;
A reported RBC of below 280% at ACRA 2 that is not cured, or any failure of either ALRe or
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
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