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Athene (ATH) & Its Unit Receive Rating Action From AM Best

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Athene Holding’s Long-Term Issuer Credit Rating (Long-Term ICR) has been upgraded to "bbb+" from "bbb" by AM Best. The rating giant also upgraded the Long-Term ICRs to "a+" from "a" and affirmed the Financial Strength Rating (FSR) of A (Excellent) of its insurance subsidiaries. AM Best also upped the Long-Term Issue Credit Ratings (Long-Term IRs) and the indicative Long-Term IRs of Athene.

The outlook of the Long-Term ICRs has been revised to stable from positive while the outlook of the FSR is stable.

The rating revisions came on the back of Athene’s solid balance sheet, sustained strong operational results, favorable business profile and favorable enterprise risk management.

AM Best noted that sustained favorable earning spreads and operating profitability have  been driving Athene’s earnings. However, low interest rate and competitive pressure remain headwinds.

The rating agency also noted that additional distribution channels in retail markets, growth of pension risk transfer business in the United States and United Kingdom, and the flow reinsurance channel in Japan bode well for Athene. AM Best estimates Athene Co-Invest Reinsurance Affiliates and the fixed annuity reinsurance agreement with Jackson National Life Insurance Company to be accretive to earnings.

Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence as well as maintaining creditworthiness of a stock. Rating downgrades not only hamper business but also increase the cost of future debt issuances.

Shares of Athene have rallied 15.7% year to date against the industry’s decline of 5.3%. Continued focus on organic and inorganic channels and its strong relationship with Apollo should help the stock retain the momentum. The stock currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Some other top-ranked stocks from the insurance industry include Sun Life Financial (SLF - Free Report) , Alleghany Corporation and James River Group Holdings (JRVR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sun Life Financial delivered an earnings surprise of 17.71% in the last reported quarter.

Alleghany delivered an earnings surprise of 48.79% in the last reported quarter.

James River Group delivered an earnings surprise of 6.86% in the last reported quarter.

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