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 company’s risk-adjusted capitalization is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supportive of its insurance, business and investment risks.

The Order’s quality of surplus is supported by its low use of reinsurance, no permitted or prescribed accounting practices, lack of financial leverage, and a highly diversified-invested asset base of overall good credit quality. The Order has reported generally stable earnings trends, supported by good mortality resulting from strong underwriting. Persistency is also supported by its very loyal member base. Mortality has increased slightly as a result of the COVID-19 pandemic, which has mostly impacted the company's more mature blocks of business. The Order markets mainly ordinary term and whole life products, which are considered less risky and more creditworthy. Other products, such as disability income and long-term care coverages, are offered with the assistance of third-party administrators and are reinsured. Over the past several years, the Order has grown its asset management business with mutual funds that are managed consistent with Catholic values.

Partially mitigating factors include challenges the Order has in growing its individual life and annuity business in highly competitive marketplaces. A substantial amount of its earnings are paid out as dividends to its members, which has resulted in statutory return ratios that are lower than some other companies in the life industry. Lastly, the Order’s invested asset portfolio includes allocations to less liquid asset classes, such as alternative assets and private placements.

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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