KBRA assigns a BBB- Insurance Financial Strength Rating (IFSR) to Alpha International Life Assurance Company (Guernsey) Ltd. (AILAC). The Outlook for the rating is Stable. AILAC is a general account life insurance company, licensed by the Guernsey Financial Services Commission under the Insurance Business (Bailiwick of Guernsey) Law 2002, to conduct long-term insurance business. Through its insurance holding company, Alpha Group (Bermuda) Ltd., the company was acquired in 2022 by Alpha Growth plc (ALGW: LSE) to further support the group’s insurance linked asset management business.

Key Credit Considerations

The rating reflects AILAC’s fee-based business model with minimal balance sheet risk, experienced management team and adequate ERM framework. AILAC only sells unit linked life investment contracts with no investment guarantees and has limited exposure to mortality risk. AILAC management is highly experienced in life insurance, asset management and Guernsey regulations, with operational functions strategically outsourced to several highly specialized firms. KBRA believes that AILAC’s enterprise risk management framework is adequate for the company’s current stage of development but expects risk management to evolve and mature as AILAC executes its business plan. Offsetting these credit strengths are a business model highly dependent on favorable tax and regulatory environments, execution risk, key person risk and very limited market position. Simplification of tax laws or elimination of favorable tax treatment of AILAC’s products in key jurisdictions could severely challenge the company’s business model and limit its ability to execute its business plan. While management has a track record in related businesses, AILAC faces execution risk as the company had been in run-off at the time of acquisition but will begin to write new contracts. AILAC needs to build brand awareness in the global wealth management market as well as establish a distribution network to succeed at generating business. With a lean staffing model, KBRA believes that the company’s ability to execute its business plan might be negatively impacted if a management team member were to depart the company. With approximately £230 million AUM/AUA at end-2022, AILAC is a small competitor in a multitrillion-dollar industry dominated by large, diversified life and wealth management companies.

Rating Sensitivities

Execution above the business plan submitted to KBRA and establishment of distribution channels could result in a positive rating action. An adverse change in risk profile, inability to execute the business plan submitted to KBRA, loss of a member of the management team, loss of an outsourced business partner without a prompt, acceptable replacement, major negative change in tax regulations or failure to evolve the ERM framework as the business matures could result in a negative rating action.

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Methodologies

Insurance: Insurer & Insurance Holding Company Global Rating Methodology

ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1002829

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