AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa-” (Superior) of The Penn Mutual Life Insurance Company (Penn Mutual Life) (Horsham, PA) and its wholly owned subsidiaries, The Penn Insurance and Annuity Company (Wilmington, DE), Vantis Life Insurance Company (Windsor, CT) and The Penn Insurance and Annuity Company of New York (Brewster, NY). These companies collectively are referred to as Penn Mutual Group (Penn Mutual). Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “a” (Excellent) on the $200 million, 6.65% surplus notes, due 2034, and the Long-Term IR of “a” (Excellent) on the $200 million, 7.625% surplus notes, due 2040, issued by Penn Mutual Life. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Penn Mutual’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 (ERM).

Penn Mutual’s risk-adjusted capitalization continues to be assessed as strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supported by the group’s consistent growth in capital over the past several years and its efficiently managed investment portfolio, which contains some built-in enhanced risk but continues to produce favorable net yields relative to peers and industry benchmarks. As an offset, capital and surplus is supported by a higher level of surplus notes compared with the industry average. There is some continued elevated exposure to long-term assets (i.e., Schedule BA) and other assets within the investment portfolio. This includes affiliated investments in Janney Montgomery Scott, LLC, as well as venture capital, mortgage-backed obligations, distressed assets, macro-hedge and other assets. The balance sheet is supported favorably by positive liquidity metrics and the financial flexibility of the organization, as most of the investment portfolio is held in liquid investments. The group’s leverage and coverage metrics are modest and still considered adequate to support its current operations. Although reinsurance leverage remains high, the reinsurance partners are all highly rated carriers. Policyholder lapses increased from continued higher interest rates.

Penn Mutual’s GAAP operating performance has improved significantly in recent years, due to continued strong sales across many business lines with additional investment income. Overall GAAP operating income was reported favorably and in-line with expectations, with strong asset management results offset by some weakness in life and annuity results through year-end 2023. In addition, AM Best notes that statutory operating metrics continue to be strained somewhat, related to sales of certain products, unfavorable mortality and new reserve regulations affecting some increased volatility. Additionally, statutory net income increased from strong equity market performance in 2023. The company benefits from its diversity in product offerings, distribution capabilities and partnerships, which has resulted in increased market share. AM Best notes that Penn Mutual considers innovation as a critical part of its strategy, which it has benefited positively from, with continued improvement efforts across the organization with real-time data. Penn Mutual’s overall risk culture is embedded strictly across all levels of the organization, and AM Best assesses the organization’s ERM program as appropriate.

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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