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Aa3 (Excellent)
Rationale
Moody's Aa3 long-term insurance financial strength rating of Pacific Life Insurance Company (Pacific Life), and its subsidiary, Pacific Life & Annuity Company (PL&A), and the A3 senior debt rating of its parent Pacific LifeCorp, are based on the companies' strong financial profile which includes exceptional capitalization, modest financial leverage, and good profitability driving strong earnings and cash flow coverage. In addition, the company maintains strong asset management capabilities and prudent asset/liability management. Pacific Life's good business profile includes an established market position in variable and universal life, annuities, and group pension and institutional products, despite the very competitive nature of the markets' products and distribution channels. Pacific Life's P-1 short-term insurance financial strength rating is based on the company's excellent liquidity, careful liability management and access to alternative funding sources.
The company's strengths are somewhat offset by risks arising from its issuance of guaranteed interest contracts (GICs) and funding agreements, adn the sensitivity of its variable annuity business to equity market fluctuations.
Pacific LifeCorp has significantly expanded its aircraft leasing operations (Aviation Capital Group) through an acquisition of a competitive lessor. Moody's has concerns regarding rapid growth of this business given its risk profile, especially if there is any relieance upon liquidity or other forms of financial support from other members of the group.
These ratings do not apply to the safety or performance of any separate accounts or mutual funds.
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