Everlake Life Insurance Company: AM Best Reaffirms Financial Strength Rating
In a demonstration of financial robustness, AM Best has reaffirmed the Financial Strength Rating of A (Excellent) for Everlake Life Insurance Company and Everlake Assurance Company, along with their Long-Term Issuer Credit Ratings of “a+” (Excellent). The continuity of a stable outlook highlights confidence in the insurer's financial health. This affirmation follows the stabilizing measures Everlake has taken to align its operations under Blackstone's ownership, reflecting a broader trend of insurance companies turning to private equity for increased capital and management expertise.
Everlake Life emerged after Blackstone acquired Allstate Life Insurance Company (ALIC) in 2021 for $4 billion. Although AM Best downgraded the insurer from an A+ (Superior) in May 2024 due to competitive pressures and a redefined business profile, the current stable ratings suggest recovery and effective strategic execution within the market.
Central to Everlake's growth strategy is its partnership with Blackstone. Through this collaboration, Everlake accesses substantial capital and sophisticated investment management, vital for progressing in the capital-consuming insurance sector. The relationship involves Everlake shifting its investment portfolio towards higher-yielding private credit assets, aiming for better alignment with long-term liabilities and potentially higher returns than traditional asset classes. While this adds some liquidity risk, AM Best acknowledges the firm's rigorous asset liability management framework.
The company employs a comprehensive reinsurance strategy, prominently using retrocession where substantial parts of assumed reinsurance business are ceded to affiliated offshore entities, such as Everlake Reinsurance Ltd. and Herald Reinsurance Ltd. This approach, common among private equity-backed insurers, enhances regulatory capital management but introduces complexities scrutinized by rating agencies. Despite structural intricacies, Everlake's enterprise risk management is regarded as appropriate and effective, managing inherent risks prudently.
Operating in the competitive annuity reinsurance sector alongside other significant private-equity-backed insurers like Athene and Global Atlantic, Everlake continues to expand its market footprint. Recent deals, such as the 2024 reinsurance agreement with Minnesota Life Insurance Company, bolster its premium growth and asset management capabilities. These strategic engagements are crucial as Everlake manages its in-force policy portfolio's natural decline.
Everlake's performance has been robust, with reported statutory net income of $275 million in 2024 and $325 million in early 2025. These financial achievements and operational shifts reinforce the effectiveness of the Blackstone-backed business model. The stable outlook from AM Best underlines confidence in Everlake's management's ability to navigate competition and complex risks effectively.