OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa+” (Superior) of Berkshire Hathaway Life Insurance Company of Nebraska (BHLN) (Omaha, NE). In addition, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) of First Berkshire Hathaway Life Insurance Company (First Berkshire Hathaway Life) (New York, NY). The outlook of these Credit Ratings (ratings) is stable.
The ratings of BHLN reflect its 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 (ERM).
Despite paying a $925 million dividend to the parent company, National Indemnity Company, in the second half of 2022, which temporarily reduced statutory total capital to $8.7 billion, BHLN has continued to produce favorable capital growth recouping the distribution by the second quarter of 2023 and growing further to just over $10.5 billion at year-end 2023. Part of this growth is attributed to improved earnings in each of the past three years to just under $500 million for year-end 2023. Earnings growth has been driven by enhanced investment income and improved underwriting results due in large part to the suspension of new business in 2023 as the company waits for more favorable macro-economic conditions for structured settlement business.
The ratings of First Berkshire Hathaway Life reflect its balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, limited business profile and appropriate ERM.
Like BHLN, 2023 also represented First Berkshire Hathaway Life’s first full year of no new sales, which along with improved investment income, led to the company’s best net earnings result in over five years of $5.5 million. Despite this result, the company still lags the industry average for return on equity due to the amount of excess capital held. AM Best notes that the company’s balance sheet continues to be highly liquid, with a material allocation of invested assets held in cash and short-term securities. AM Best also notes that both BHLN and First Berkshire Hathaway Life receive substantial financial, operational, and other resource support from their parent company, National Indemnity Company.
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