AM Best Removes From Under Review With Developing Implications and Upgrades Credit Ratings of Merit Life Insurance Co.

AM Best has removed from under review with developing implications and upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) of Merit Life Insurance Co. (Merit) (Charlotte, NC). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Merit’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The rating upgrades reflect an upward revision of Merit’s balance sheet strength assessment to the very strong level from strong, driven by the increase in Merit’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), resulting from a significant increase in statutory surplus. The increase in surplus follows a recent acquisition and capital injection from the company’s new parent, Knighthead Holdings Ltd. (Knighthead).

The ratings also reflect significant and explicit parental support and reinsurance protection from its affiliates. In turn, Merit provides Knighthead with access to the U.S. retail market. Under the new ownership, Merit is poised to expand its product offerings and enter the U.S. market with the introduction of multi-year guaranteed annuity products. AM Best will continue to monitor the company’s operating performance and its impact on the strengthened balance sheet closely.

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.

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