AM Best Affirms Credit Ratings of Knights of Columbus
AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa” (Superior) of Knights of Columbus (the Order) (New Haven, CT). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect the Order’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
The Order’s risk-adjusted capital is assessed at the strongest level, as measured by Best Capital Adequacy Ratio (BCAR), with little volatility over the past few years. The quality of surplus is good due to a good risk profile of liabilities, no prescribed or permitted accounting practices, no use of captives, and no financial leverage. Invested assets are of high quality and are highly diversified. The Order has historically good earnings trends primarily driven by the whole life line of business, which is considered to be less risky and more creditworthy. Net income reached a 10-year high in 2022, largely due to a recent improvement in benefit experience. Net investment income has been relatively flat over the last few years due to a combination of an increasing asset base as well as a slight decline in yields. The Order has continued to grow its asset management business, with assets under management growing to just over $1.5 billion.
Partially mitigating factors include limited financial flexibility of the Order since the Order does not have current access to public capital markets and is not a member of the FHLB. In addition, the Order has maintained a high dividend payout ratio that has resulted in low post-dividend profitability metrics relative to peers. Other mitigating factors include an increasing allocation to illiquid assets such as private placements and the competitive nature of the ordinary life and annuity markets that it operates in.
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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