OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” (Good) to Pillar Life Insurance Company (Pillar) (Harrisburg, PA). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Pillar’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
As a new company formation, AM Best requires a level of conservatism to be built into initial capital levels, and the strong balance sheet strength assessment is based on the expectation that Pillar’s current risk-adjusted capital level will decline in the near-term as the company starts to write business. Rating factors impacting the company are a limited product offering within a highly competitive product space, limited capital resources to draw from, and initial operating loses, which should reverse over time.
Pillar plans to operate with a true direct-to-consumer (DTC) business model, with no intentions to use traditional distribution channels for its products. AM Best views the true DTC business model as higher risk, as this model is untested and many organizations use DTC for certain products along with traditional distribution channels. Pillar’s business strategy is subject to execution risk, and it will need to continue to enhance its ERM risk measurement and modeling capabilities as its balance sheet and liability profile diversify in upcoming years.
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