Brookfield Reinsurance Announces Credit Rating Upgrade of American Equity Investment Life Insurance Company to A

Rhea-AI Summary

Brookfield Reinsurance announced that its subsidiary American Equity Investment Life Insurance Company received an upgrade in its Insurer Financial Strength rating from S&P. The upgrade reflects AEL's core role in Brookfield Reinsurance, benefiting from its strong capital position. The ratings of other entities within the group were also reaffirmed or upgraded, indicating a positive outlook for the company.

Positive

• AEL's upgrade in its Insurer Financial Strength rating reflects its core role in Brookfield Reinsurance and benefits from its strong capital position.

• The rating upgrades for AEILHC's senior bonds and preferred shares indicate improved credit quality and financial stability.

Negative

• None.

Insights

Financial Analyst

The credit rating upgrade for American Equity Investment Life Insurance Company to 'A' by S&P Global Ratings signifies the firm's strengthened capacity to meet its financial commitments. Such an upgrade usually indicates improved financial health and operational stability, which can enhance the company's attractiveness to investors and potentially lower the cost of capital. Ratings are a key factor in determining the interest rates at which companies can issue new debt, hence a higher rating could lead to more favorable borrowing terms. The reaffirmation of American National Insurance Company's 'A' rating, with a removed credit watch, suggests stable outlook post-acquisition, aligning investor expectations with the company's financial situation. Upgraded ratings for senior bonds and preferred shares reflect upon the company's ability to meet obligations, which might boost investor confidence in the firm's debt instruments. Over the long term, the financial synergies from the acquisition may allow for a more robust business model, leading to potential growth or dividend prospects. However, investors should be mindful that credit ratings are just one piece of a much larger financial puzzle and should not be the sole basis for investment decisions.

Risk Management Expert

An upgrade in credit rating, especially to an 'A' level by S&P, generally indicates a lower probability of credit default, which in turn reduces the risk profile of the insurance firm and its parent company. This risk mitigation could translate into a stronger bargaining position when negotiating reinsurance contracts or pursuing strategic growth initiatives. Reduced risk also may make the company's bonds more attractive to conservative investors seeking stable income with lower default risk. It's important for investors to consider this alongside other risk factors, such as market volatility and the regulatory environment. The removal of the credit watch status post-acquisition points to a resolution of the uncertainties that typically concern risk-averse stakeholders, potentially leading to a more stable share price performance.

BROOKFIELD, NEWS, May 07, 2024 (GLOBE NEWSWIRE) -- Brookfield Reinsurance (NYSE, TSX: BNRE, BNRE.A) today announced that its wholly-owned operating subsidiary American Equity Investment Life Insurance Company (“AEL”) has received an upgrade to its Insurer Financial Strength (“IFS”) rating from S&P Global Ratings (“S&P”) to “A” from “A-”. The upgrade reflects AEL being core to the overall Brookfield Reinsurance group and benefitting from the strong capital position and earnings profile of Brookfield Reinsurance.

American National Insurance Company’s “A” IFS rating has been reaffirmed, with credit watch removed following the completion of Brookfield Reinsurance’s acquisition of American Equity Investment Life Holding Company (“AEILHC”).

As a result, the existing senior bonds of AEILHC will receive a rating increase to “BBB” from “BBB-”, and the outstanding preferred shares of AEILHC will receive a rating increase to “BB+” from “BB” from S&P. The rating for American National Group LLC’s existing senior bonds has been reaffirmed at “BBB”, with credit watch removed.

Additionally, Fitch Ratings (“Fitch”) has upgraded AEILHC’s existing senior unsecured notes to “BBB” from “BBB-”, and its preferred shares to “BB+” from “BB”.

About Brookfield Reinsurance

Brookfield Reinsurance Ltd. (NYSE; TSX: BNRE, BNRE.A) operates a leading capital solutions business providing insurance and reinsurance services to individuals and institutions. Each class A exchangeable limited voting share and each class A-1 exchangeable non-voting share of Brookfield Reinsurance are exchangeable on a one-for-one basis with a class A limited voting share of Brookfield Corporation. (NYSE/TSX: BN).

For more information, please visit our website at bnre.brookfield.com.

Media: Kerrie McHugh Tel: (212) 618-3469 Email: kerrie.mchugh@brookfield.com

Investor Relations: Rachel Powell Tel: (416) 956-5141 Email: rachel.powell@brookfield.com

Forward Looking Statements

This news release and any related oral statements made by our representatives may contain “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, and “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements which reflect management’s expectations regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of Brookfield Reinsurance, AEL and Brookfield Reinsurance’s other subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods. In particular, statements regarding the merger and redomestication of AEILHC and American National Group, LLC, and its anticipated impact on ratings, constitute forward looking statements.. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” In particular, the forward-looking statements contained in this news release include statements referring to the future state of the economy or the securities market and expected future deployment of capital and financial earnings.

Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of Brookfield Reinsurance or AEL to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Readers are urged to consider these risks, as well as other uncertainties, factors and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements, which are based only on information available to us as of the date of this news release. Except as required by law, Brookfield undertakes no obligation to publicly update or revise any forward-looking statements, whether written or oral, that may be as a result of new information, future events or otherwise.

FAQ

What is the significance of the upgrade in American Equity Investment Life Insurance Company's Insurer Financial Strength rating?

The upgrade reflects AEL being core to Brookfield Reinsurance and benefiting from its strong capital position.

What impact did Brookfield Reinsurance's acquisition of American Equity Investment Life Holding Company have on ratings?

The acquisition led to rating increases for AEILHC's senior bonds and preferred shares, as well as the removal of credit watch on American National Insurance Company's rating.

Which rating agencies were involved in the upgrades and reaffirmations?

S&P Global Ratings and Fitch Ratings were involved in the upgrades and reaffirmations of the ratings.