The agency cited elevated investment portfolio risk, including heavy commercial mortgage loan exposure and above-average below-investment-grade bond holdings, while affirming the insurers’ financial strength and issuer credit ratings.
AM Best revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) for New Era Life Insurance Company, New Era Life Insurance Company of the Midwest and Philadelphia American Life Insurance Company, collectively referred to as New Era Group of Houston, Texas. The ratings reflect balance sheet strength that AM Best assesses as strong, along with adequate operating performance, a neutral business profile and appropriate enterprise risk management. The outlook revision reflects concerns about elevated investment portfolio risk, notably a commercial mortgage loan allocation well above the industry average and an above-average allocation to below investment grade bonds, even though that exposure has been declining. AM Best said New Era Group has a large commercial loan portfolio concentrated in Texas, New York and California, representing significant exposure relative to capital and surplus as of year-end 2025. It said mitigating factors include low loan-to-value ratios, very low foreclosure rates and the group’s long track record managing the asset class. The agency also noted certain impairments in recent years, which have added volatility through realized and unrealized capital gains and losses. The ratings also reflect consistently positive net gains from operations, core businesses in Medicare supplement, underage 65 indemnity and fixed annuities, and a profitable niche in the senior market. AM Best said the group returned to positive net income in 2025 after breakeven results in 2024, while also facing pressure from higher health care costs in accident and health business and increased benefits and surrenders in its annuity line.