AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Lombard International Life Assurance Company (LILAC) (Philadelphia, PA), Lombard International Life Assurance Company of New York (LILAC NY) (New York, NY), Lombard International Assurance S.A. (LIA SA) (Luxembourg), Lombard International Life Assurance Company (Bermuda) Ltd. (LILAC Bermuda) (Bermuda), and Lombard International Life Ltd. (LILL) (Bermuda). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb-” of LIA Holdings Ltd. (Lombard International) (United Kingdom), a non-operating holding company. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Lombard International’s very strong balance sheet strength, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings of LILAC, LILAC NY, LIA SA, LILAC Bermuda, and LILL factor in their strategic importance to Lombard International, and their integration within the group.
Lombard International’s balance sheet strength assessment is underpinned by its consolidated risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best considers the group’s liability profile to be low risk, as it primarily provides unit-linked products, for which policyholders bear the investment risk. There are no living benefit guarantees and mortality risk is low, as Lombard International retains only a minimal amount per life, whilst the remainder is reinsured with a variety of reinsurers of high credit quality. Partially offsetting factors include the group’s relatively elevated financial leverage, and its high reliance on soft capital components, including value in force, to support its risk-adjusted capitalisation.
Lombard International’s operating performance is supported by a steady inflow of fee revenue, as the group expands its assets under management. AM Best expects the group to continue to produce stable cash flows, driven by solid new business generation and excellent persistency of the existing portfolio.
Lombard International maintains a solid position in its core markets, offering tailored products to high and ultra-high net worth individuals primarily in Europe and the U.S. A focus on this client base means that the group is highly susceptible to changes in legislation with respect to domestic and international taxation.
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Stanislav Stoev, ACCA
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Ghislain Le Cam, CFA, FRM
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