Press Release

DBRS Morningstar Confirms Ratings on The Independent Order of Foresters at “A,” Stable Trends

Insurance Organizations
July 10, 2023

DBRS Limited (DBRS Morningstar) confirmed the Financial Strength Rating and Issuer Rating of The Independent Order of Foresters (Foresters Financial or the Company) at “A” and its Subordinated Debt rating at A (low). All trends are Stable.

The ratings and Stable trends reflect the Company’s established presence in the U.S., Canadian, and UK life insurance and asset-management markets, its relatively diversified product mix, a high-quality investment portfolio with strong liquidity, and ample capital. The ratings also consider the Company's challenges in delivering strong growth and profitability, as it remains a smaller player strategically focused on its Fraternal Society mission. Because of its focus on simplified issue life insurance, Foresters Financial has higher exposure to mortality risk, which resulted in elevated losses during the Coronavirus Disease (COVID-19) pandemic. However, the Company took appropriate actions in reaction to this adverse experience which contributed to two straight years of losses and returned to profitability in 2022.

DBRS Morningstar views Foresters Financial’s ratings as well placed in their current rating categories. Over the longer term, the ratings would be upgraded if the Company materially strengthens its market position and reduces earnings volatility while maintaining an appropriate capital buffer and financial leverage. Conversely, the ratings would be downgraded if there were a sustained deterioration in market position, risk profile, or capitalization.

Foresters Financial operates in the highly fragmented life insurance market in the U.S. as well as in the Canadian market, which is dominated by a few large players. The Company also has a UK asset-management business, which provides diversification benefits. It relies on its fraternal status to differentiate its product offering and has built relationships with distribution organizations, including multilevel marketing channels. Foresters Financial focuses on simplified life insurance products in North America and savings products in the UK. The Company has a multichannel distribution strategy comprising multilevel marketers, independent marketing organizations, managing general agents, independent agents, and direct-to-consumer in North America and a captive sales force in the UK.

Foresters Financial was exposed to excess mortality caused by the coronavirus pandemic because of the demographic characteristics of its policyholders. The Company took appropriate steps in response, including setting up additional reserves to account for the deterioration in the mortality experience. DBRS Morningstar views Foresters Financial as having a sound investment strategy for its externally managed general account assets, with moderate exposure to credit risk as reflected in the quality of its fixed-income portfolio. Invested assets consist largely of a fixed-income portfolio that is well-diversified across corporate sectors. The average credit quality in the portfolio is "A." The Company has market risk exposure through its investments and through the asset under management based fee income on its savings products.

Foresters Financial reported a consolidated net income of $219 million in 2022, mainly driven by supportive market conditions with rising interest rates being favourable to the Company’s business. After two years of losses caused by the coronavirus pandemic, Foresters Financial reported a strong 10.8% return on equity (ROE) for 2022, which DBRS Morningstar views as unsustainable given its not-for-profit orientation and weaker economic conditions in 2023. As a Fraternal Benefit Society, the Company has less pressure to produce high profitability levels. Foresters Financial also maintains a substantial capital buffer, which reduces ROE compared to its peers but allows for greater strategic and financial flexibility while the Company continues to provide membership benefits to its policyholders as part of its Fraternal purpose.

Foresters Financial has a low concentration of nonliquid assets, such as loans to certificate holders. The Company also maintains a USD 100 million committed five-year revolving facility, expiring in 2025, available for additional liquidity, if needed. The high proportion of marketable assets and the quality of the investment portfolio also contribute to Foresters Financial’s ability to withstand a stressed liquidity environment. Its consolidated LICAT ratio of 193% at Q1 2023 was very strong and provides a substantial cushion above the regulatory target of 100%. The regulated U.S. branch is strongly capitalized on an individual basis with a risk-based capital ratio of 379% as of YE2022. Foresters Financial maintains a prudent financial leverage ratio at 10.6% as of YE2022.

There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at

The Grid Summary Grades for Foresters Financial are as follows: Franchise Strength—Good/Moderate; Risk Profile—Good; Earnings Ability—Moderate; Liquidity—Strong; Capitalization—Strong/Good.

All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Insurance Companies and Insurance Organizations (August 31, 2022; In addition, DBRS Morningstar uses the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (July 4, 2023; in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at:

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at

The rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the rating process for this rating action.

DBRS Morningstar had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is a solicited credit rating.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are under regular surveillance.

For more information on this credit or on this industry, visit

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577