AM Best Places Credit Ratings of American Heritage Life Insurance Company Under Review With Negative Implications
AM Best has placed the credit ratings of American Heritage Life Insurance Company under review with negative implications following the announcement of its acquisition by StanCorp Financial Group from The Allstate [NYSE: ALL]. The Financial Strength Rating (A+ Superior) and Long-Term Issuer Credit Rating (aa- Superior) may face a potential one-notch downgrade upon completion of the sale, expected in the first half of 2025. This review is not due to a change in American Heritage's creditworthiness but reflects its departure from the Allstate organization and StanCorp's lower current ratings. The transaction, which involves Allstate's employer voluntary benefits business, requires regulatory approval.
AM Best ha posto i rating di credito della American Heritage Life Insurance Company sotto revisione con implicazioni negative a seguito dell'annuncio della sua acquisizione da parte di StanCorp Financial Group da The Allstate [NYSE: ALL]. Il Rating di Solidità Finanziaria (A+ Superiore) e il Rating di Credito dell'Emittente a Lungo Termine (aa- Superiore) potrebbero subire un possibile ribasso di un notch al completamento della vendita, previsto nella prima metà del 2025. Questa revisione non è dovuta a un cambiamento nella capacità creditizia di American Heritage, ma riflette la sua uscita dall'organizzazione Allstate e i rating attuali più bassi di StanCorp. La transazione, che coinvolge l'attività di benefici volontari per i datori di lavoro di Allstate, richiede l'approvazione normativa.
AM Best ha colocado las calificaciones de crédito de American Heritage Life Insurance Company bajo revisión con implicaciones negativas tras el anuncio de su adquisición por parte de StanCorp Financial Group de The Allstate [NYSE: ALL]. La Calificación de Solidez Financiera (A+ Superior) y la Calificación de Crédito del Emisor a Largo Plazo (aa- Superior) podrían enfrentarse a un posible descenso de una categoría al completarse la venta, que se espera para la primera mitad de 2025. Esta revisión no se debe a un cambio en la solvencia de American Heritage, sino que refleja su salida de la organización Allstate y las calificaciones más bajas actuales de StanCorp. La transacción, que involucra el negocio de beneficios voluntarios para empleados de Allstate, requiere aprobación regulatoria.
AM Best는 American Heritage Life Insurance Company의 신용 등급을 StanCorp Financial Group이 The Allstate [NYSE: ALL]로 인수하기로 발표한 후 부정적인 함의를 동반하여 검토 중에 있다고 발표했습니다. 재무 강도 등급(A+ 우수)과 장기 발행자 신용 등급(aa- 우수)은 2025년 상반기 내에 완료될 것으로 예상되는 판매 완료 시 한 단계 하락할 가능성이 있습니다. 이 검토는 American Heritage의 신용worthiness 변경 때문이 아니라 Allstate 조직에서의 이탈과 StanCorp의 현재 등급 하락을 반영합니다. 이번 거래는 Allstate의 고용주 자발적 혜택 사업을 포함하며, 규제 승인이 필요합니다.
AM Best a placé les notations de crédit de la American Heritage Life Insurance Company sous revue avec des implications négatives suite à l'annonce de son acquisition par StanCorp Financial Group de The Allstate [NYSE: ALL]. La note de solidité financière (A+ Supérieur) et la note de crédit d'émetteur à long terme (aa- Supérieur) pourraient subir une éventuelle dégradation d'un cran lors de l'achèvement de la vente, prévue pour la première moitié de 2025. Cette révision n'est pas due à un changement dans la solvabilité d'American Heritage, mais reflète son départ de l'organisation Allstate et les notes actuelles plus basses de StanCorp. La transaction, qui concerne l'activité de prestations volontaires des employeurs d'Allstate, nécessite une approbation réglementaire.
AM Best hat die Kreditratings der American Heritage Life Insurance Company aufgrund der Ankündigung ihrer Übernahme durch die StanCorp Financial Group von The Allstate [NYSE: ALL] unter Prüfung mit negativen Implikationen gestellt. Die Finanzstärke-Bewertung (A+ Superior) und die langfristige Emittenten-Kreditbewertung (aa- Superior) könnten beim Abschluss des Verkaufs, der für die erste Hälfte des Jahres 2025 erwartet wird, möglicherweise um einen Punkt herabgestuft werden. Diese Prüfung ist nicht auf eine Änderung der Kreditwürdigkeit von American Heritage zurückzuführen, sondern spiegelt deren Abkehr von der Allstate-Organisation und die aktuell niedrigeren Ratings von StanCorp wider. Die Transaktion, die die freiwilligen Arbeitgeberleistungen von Allstate umfasst, benötigt eine regulatorische Genehmigung.
- None.
- Potential one-notch downgrade in American Heritage's credit ratings
- Loss of Allstate's organizational support for American Heritage
- Uncertainty surrounding the impact of new ownership on American Heritage's operations
Insights
This credit rating review by AM Best for American Heritage Life Insurance Company is a significant development in the insurance sector. The potential downgrade, albeit by just one notch, signals a material change in the company's risk profile. The acquisition by StanCorp removes American Heritage from Allstate's umbrella, potentially affecting its financial strength and market position. For investors, this could mean reduced stability and possibly lower returns in the short term.
However, it's important to note that AM Best emphasizes this is not a reflection of American Heritage's creditworthiness. The company's fundamentals remain solid. The long timeline until H1 2025 for deal completion provides a buffer for strategic adjustments. Investors should monitor regulatory approvals and integration plans, as these will be key to maintaining American Heritage's market standing post-acquisition.
The potential downgrade of American Heritage's ratings post-acquisition is a red flag for investors. It suggests that StanCorp's financial strength may not match Allstate's, which could impact American Heritage's ability to write new business or retain existing clients. This could lead to reduced premium income and potentially lower profitability in the medium term.
However, the voluntary benefits sector is growing and this acquisition could position StanCorp more competitively in this market. Investors should watch for synergies and cost savings that might offset the potential rating downgrade. The long lead time to closing also provides an opportunity for StanCorp to strengthen its financial position. Keep an eye on StanCorp's capital raising activities and financial results leading up to the deal closure, as these could mitigate the negative implications.
This transaction represents a strategic shift for both Allstate and StanCorp. For Allstate, divesting its employer voluntary benefits business suggests a focus on core operations and potentially freeing up capital for other initiatives. This could be positive for Allstate shareholders if the proceeds are reinvested effectively or returned to shareholders.
For StanCorp, this acquisition signals an aggressive growth strategy in the voluntary benefits space. The challenge will be in maintaining American Heritage's market position without Allstate's brand backing. Success will depend on StanCorp's ability to integrate operations efficiently and leverage American Heritage's expertise. Investors should monitor post-acquisition performance metrics closely, particularly customer retention rates and new business growth, to gauge the deal's long-term value creation potential.
This follows the Aug. 13, 2024, announcement that StanCorp Financial Group, Inc. (StanCorp) and The Allstate Corporation (Allstate) [NYSE: ALL] have entered into a definitive agreement under which StanCorp will acquire Allstate’s employer voluntary benefits business. The Credit Ratings (ratings) of American Heritage have been placed under review with negative implications pending the closure of the sale, which requires regulatory approval.
At the completion of the acquisition, there is a likelihood of negative rating action for American Heritage, potentially of one notch for both its FSR and Long-Term ICR, as a result of it no longer being a part of the Allstate organization and the current lower ratings of StanCorp. This negative implication for American Heritage is not a reflection of a change in its credit worthiness.
The ratings will remain under review until the close of the transaction, which is not expected until the first half of 2025.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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Elizabeth Blamble
Senior Financial Analyst
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elizabeth.blamble@ambest.com
Edin Imsirovic
Director
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Christopher Sharkey
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Al Slavin
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Source: AM Best
FAQ
What is happening to American Heritage Life Insurance Company's credit ratings?
Why are American Heritage's credit ratings under review with negative implications?
When is the acquisition of American Heritage by StanCorp expected to close?
What potential impact could the acquisition have on American Heritage's ratings?
