by Structured Settlement Watchdog®
There is some good news for people with structured settlements set up with Aviva Life, CGU Life or Commercial Union Life following the acquisition by Athene of Aviva's USA operations in 2013.
A.M. Best has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and the issuer credit ratings (ICR) to “a-” from “bbb+” of the members of Athene USA Group (AUSAG).
The outlook for all ratings has been revised to stable from positive. (See below for a detailed listing of AUSAG’s group members and ratings.) AUSAG is the consolidating rating unit for the U.S. operating companies, which is focused on the fixed indexed and fixed annuity market segments.
Concurrently,A.M. Best has upgraded the ICR to “bbb-” from “bb+” to Athene Holding Ltd (AHL) (Bermuda). The outlook has also been revised to stable from positive. AHL operates as the holding company for the U.S. and Bermuda operations.
The rating actions on the AUSAG group of companies is based on additional cash capital contributed to the company in April 2015 and significant progress toward satisfying the material weakness issue as stated by A.M. Best in a press release dated Oct. 17, 2014, at which time the outlook for the ratings was revised to positive from stable. AUSAG is backed by a strong management team with proven ability to grow capital organically and from new capital generation in the private placement market, as well as the demonstrated ability to integrate Aviva, a much larger entity.
Not all is positive about the Athene integration with Aviva USA.
A.M. Best clearly is not aware of what has happened with Aviva USA structured settlement annuitants.
Inquiries made to management at Athene last Fall suggest that there was a termination of the Aviva Capital Maintenance Agreement (CMA), a material sales inducement, involving a $100 Billion UK Aviva subsidiary that still exists, that Aviva used in its filed sales brochures to induce the placement of an estimated $1 billion of structured settlement annuity business in the United States. This termination is controversial because ALL of the Aviva sales literature, which would have had to have been filed with insurance regulators, and the CGU and Aviva structured annuity contracts issued with a CMA , expressly stated the unambiguous words that the CMA was "absolute, unconditional, present and continuing".
My communications with Aviva's legal department in London last fall were met with a turf off to Athene and Athene general counsel informed me in writing in late October 2014, of the CMA termination in October 2013, after some foot dragging.
Aviva structured settlement products were especially favored by many settlement planners because of its willingness to accept an assignment from a single claimant qualified settlement fund between 2000 and early 2009, when it it ceased writing structured settlements
There is nothing to suggest that Athene is financially impaired and the AM Best announcement is very good positive news. I hope that Athene's success continues.
Could structured settlement annuitants go after Aviva in the UK?
Some have suggested that in the event of financial impairment of Athene's assignment company and its parent fails to step up to the plate, that annuitants could go after Aviva in the UK, to force them to perform on the CMA, but at what expense? The experience of Executive Life of New York suggests that one cannot simply "let sleeping dogs lie'.