AM Best Affirms Credit Ratings of Equitable Holdings, Inc. and Its Life Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Equitable Financial Life Insurance Company of America (EFLICOA) (Phoenix, AZ) and Equitable Financial Life Insurance Company (EFLIC) (New York, NY). EFLICOA and EFLIC collectively are referred to as Equitable Life Group. The outlook of these Credit Ratings (ratings) is stable.

Concurrently, AM Best has affirmed the FSR of B+ (Good) and the Long-Term ICR of “bbb-” of Corporate Solutions Life Reinsurance Company (Corporate Solutions Life) (Wilmington, Delaware). Additionally, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb” of Equitable Financial Life and Annuity Company (Equitable Financial Life & Annuity) (Englewood, CO). AM Best has also affirmed the Long-Term ICR of “bbb+” of Equitable Holdings, Inc. (headquartered in New York, NY) and all of its Long-Term Issue Credit Ratings (Long-Term IR). The outlook of these ratings is stable. Please see below for a detailed list of the ratings of the other subsidiaries and Long-Term IRs.

Equitable Life Group’s ratings reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The Equitable Life Group’s ratings are attributable to its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), its strong financial flexibility, well-developed risk management practices and its position among the market leaders in variable annuities (VA), variable universal life and 403(b) retirement annuities. Through its AllianceBernstein affiliate, the group continues to maintain a significant global asset management footprint, which provides a material source of unregulated cash flow to the holding company. Additionally, the company has recorded consistently strong operating earnings in the past several years, although with some volatility, but is well-diversified across business lines. Consolidated financial leverage at Equitable Holdings is still considered to be moderate, but has been on the rise a bit as of late due to issuance of perpetual preferred stock.

AM Best notes that the holding company maintains access to a contingent capital facility, which further enhances the group’s positive financial flexibility. The Equitable Life Group also benefits from a diversified and productive distribution model, which includes both a large captive distribution channel, as well as extensive third-party distribution relationships. The overall strong liquidity is further supported by an additional new funding agreement-backed note program.

While the Equitable Life Group intends to maintain its strongest risk-adjusted capital profile going forward, it remains exposed to equity market pressures on both sides of its balance sheet. These exposures emanate from its variable insurance products with guaranteed benefits, as well as potential volatility in revenue from asset fees as a result of market value changes in its large separate account book of business and derivative activity. Partially mitigating these exposures is Equitable Holdings’ recent agreement with Venerable Holdings, Inc. to reinsure $13 billion of legacy VA policies sold between 2006 and 2008, which includes the sale of the runoff VA reinsurance entity, Corporate Solutions Life. The transferred block is approximately 33% of the company’s fixed-rate guaranteed minimum benefits business or approximately 13% of total in-force VA business as of June 30, 2020, and should free up around $800 million of regulatory capital. The closing of this transaction is expected in the second quarter of 2021, and should significantly reduce its exposure to the VA guarantees on its books.

AM Best also notes that the Equitable Life Group continues to maintain an appropriate ERM framework following its initial public offering, with a focus on hedging strategies to protect its statutory and economic capital. The company has updated its economic capital model to be more U.S. centric by shifting from a Solvency II framework to a U.S. economic and risk-based capital/contingent tail expectation-centric capital model post-IPO.

Corporate Solutions Life’s ratings reflect its balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, very limited business profile and appropriate ERM.

Equitable Financial Life & Annuity’s ratings reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile and appropriate ERM.

The following Long-Term IRs have been assigned with a stable outlook:

Equitable Holdings, Inc.—

-- “bbb-” on $800 million 5.25% preferred stock, due 2024

-- “bbb-” on $500 million 4.95% preferred stock, due 2025

-- “bbb-” on $300 million 4.30% preferred stock, due 2026

Equitable Financial Life Global Funding — “a+” program rating

-- “a+” on $650 million 1.4% senior unsecured notes, due 2025

-- “a+” on $500 million 1.4% senior unsecured notes, due 2027

The following Long-Term IRs have been affirmed with a stable outlook:

Equitable Holdings, Inc.—

-- “bbb+” on $1.5 billion 5.0% senior unsecured debentures, due 2048

-- “bbb+” on $1.5 billion 4.35% senior unsecured debentures, due 2028

-- “bbb+” on $800 million 3.9% senior unsecured debentures, due 2023

-- “bbb+” on $350 million 7.0% senior unsecured debentures, due 2028 (originally issued by AXA Financial, Inc.)

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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