AM Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Ratings of “aa+” (Superior) of Guardian Life Insurance Company of America (Guardian Life) (New York, NY) and its core subsidiaries, Guardian Insurance & Annuity Company, Inc. (GIAC) (Wilmington, DE) and Berkshire Life Insurance Company of America (Pittsfield, MA) (together referred to as Guardian). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “aa-” (Superior) of Guardian Life’s surplus notes, and the Long-Term IRs of “aa+” (Superior) of Guardian Life Global Funding’s medium-term notes that are backed by funding agreements issued by Guardian Life. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the Long-Term IRs.)

The ratings reflect Guardian’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).

The rating affirmations reflect a continuation of Guardian’s favorable overall balance sheet strength metrics, underpinned by its risk-adjusted capitalization assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite its mutual company structure, Guardian Life has favorable financial flexibility with a diverse source of additional capital and liquidity, which includes Federal Home Loan Bank borrowings, and a bank line of credit that has not been drawn but is available if needed. The group does not utilize onshore captives and no entity adopts any permitted accounting practice by their state regulators. Guardian has generated favorable net cash flows for the past five years, and it has modest financial and operating leverages, as well as interest coverage that remains well within tolerance for its rating levels. Earnings are diversified across Guardian’s multiple product offerings, which are augmented by some fee-based businesses, positive premium trends and new sources of distribution. In particular, GIAC has significantly enhanced individual annuity sales in recent years, supported by strategic reinsurance relationships, which has the potential to drive further increases to investment spread income, invested assets and available capital.

Partially offsetting these positive rating factors is the potential for higher interest rate exposure should the company’s reserve profile continue to shift toward annuities. As ceded volumes increase over time, reinsurer counterparty credit risk analysis during Guardian’s financial planning, monitoring and stress testing processes under the company’s ERM framework will gain even more importance. AM Best will monitor Guardian’s periodic credit reviews of their reinsurers, focusing on, among other things, financial capacity, stability, trends and commitment to the reinsurance business. Guardian maintains a strong market position in individual life insurance as the industry's fourth-largest writer of participating whole life, which in AM Best’s view mitigates product risk. However, the group has expanded its product footprint into other markets, and the organization faces ongoing competition from mutual and stock companies in the highly competitive U.S. life/annuity market.

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

Guardian Life Insurance Company of America—

-- “aa-” (Superior) on $400 million 7.375% surplus notes, due 2039

-- “aa-” (Superior) on $450 million 4.875% surplus notes, due 2064

-- “aa-” (Superior) on $300 million 3.700% surplus notes, due 2070

-- “aa-” (Superior) on $350 million 4.850% surplus notes, due 2077

Guardian Life Global Funding – “aa+” (Superior) program rating

-- “aa+” (Superior) on all outstanding notes issued under the program

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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