A.M. Best Revises Outlook to Negative for Gerber Life Insurance Company

A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a” of Gerber Life Insurance Company (Gerber Life) (White Plains, NY). Gerber Life was acquired in August 2007 by Nestlé SA (Nestlé) (Switzerland) [Swiss: NESN] from Novartis. Nestlé is a food and beverage conglomerate with operations in almost every country around the world.

In revising the outlook to negative, A.M. Best notes the deteriorating levels of statutory profitability within Gerber Life’s ordinary life line, a decline in risk-based capital resulting from substantial realized losses in its investment portfolio and a modest decline in new business sales during the second half of 2008. While Gerber Life continues to maintain a solid level of risk-based capital despite the 2008 decline, the company continues to maintain a sizeable unrealized loss position on its remaining investments. A.M. Best notes that the company has some exposure to structured securities, including residential and commercial mortgage-backed securities and other asset-backed securities. Although the majority of these securities are in the higher-rated tranches, A.M. Best believes that some of these securitized investments, especially within the commercial mortgage-backed sector, could be at risk of impairment over the near term...

Business Wire: A.M. Best Revises Outlook to Negative for Gerber Life Insurance Company