...Statutory Dividend Capacity Improved: The capacity of U.S. life insurance operating companies to provide statutory dividends to their parent companies increased significantly over the past two years. Improved statutory dividend capacity was largely attributed to record statutory earnings driven by favorable equity markets, which led to higher fee income and reserve releases tied to variable annuity guarantees. Statutory dividend capacity also benefited from the significant improvement in statutory capital and earned surplus levels, which are factored into dividend capacity based on state insurance regulations. Statutory dividend capacity is an important credit metric that Fitch Ratings uses to assess the debt service capability of a U.S. life insurer that issues debt from a holding company structure. Improved Dividend Capacity Unsustainable: While Fitch believes that run-rate statutory dividend capacity has improved in the U.S. life insurance sector, we view the heightened level reported...
