AM Best Affirms Credit Ratings of Thrivent Financial for Lutherans

BY Business Wire | CORPORATE | 06/29/22 02:47 PM EDT

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of ?aa+? (Superior) of Thrivent Financial for Lutherans (Thrivent) (headquartered in Minneapolis, MN). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Thrivent?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 ratings recognize Thrivent?s favorable persistency from its loyal membership base and efforts to continue to grow despite the challenging economic environment. Thrivent maintains a diversified and well-managed product portfolio that is intended to complement its clients? needs over their life cycles. The company continues to diversify its portfolio to meet client needs. In 2022, Thrivent added a Whole Life/LTC Hybrid product to round out its diversification and has plans for more new products in the future. Thrivent?s reserves are weighted toward ordinary life, which AM Best views as a more creditworthy liability profile.

In 2021, Thrivent experienced record high investment income at slightly over $4 billion, driven by strong performance of its private equity investments, which led to capital and surplus increasing by almost $3 billion. Earnings in the first quarter of 2022 remained strong, although capital growth while positive was offset by

unrealized losses from market movements. The company enhanced its liquidity at the end of 2021, adding borrowing capacity at the Federal Home Loan Bank and utilizes that capacity for liquidity and spread lending. Thrivent maintains a high quality capital structure, which utilizes no debt and no financial reinsurance or affiliated captives to house redundant reserves. Additionally, Thrivent?s risk-adjusted capitalization continues to be maintained at the strongest level, as measured by Best?s Capital Adequacy Ratio (BCAR), and it utilizes a sophisticated ERM program to manage and report risks, which includes a multitude of stress-testing scenarios accompanied with a clear action plan. Thrivent?s ERM program helped it navigate the COVID-19 pandemic headwinds over the past two years.

Offsetting rating factors include historical losses within its legacy long-term care block, which comprises a small part of its portfolio. However, Thrivent's long-term care (LTC) business, which consists of a run-off legacy block and new LTC block reported an operating gain in 2021, due to reserve releases and favorable experience related to COVID over the past two years on its closed block of legacy LTC contracts. Additionally, Thrivent maintains a slightly elevated level of Schedule BA assets, which it has managed well during the pandemic. Additionally, Thrivent has a large percentage of interest-sensitive reserves and a higher-than-average percentage of annuities lacking surrender charge protection. This exposes Thrivent to spread compression and given the rapidly rising interest rate environment, this presents a disintermediation risk within its annuity block.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright ? 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article