AM Best Puts Delaware Life, Clear Spring and Gainbridge on Negative Outlook: What It Means for Annuity Owners

Updated August 20, 2026

On July 31, 2026, AM Best revised its rating outlooks to negative for three annuity carriers owned by Group 1001 Insurance Holdings: Delaware Life Insurance Company, Clear Spring Life and Annuity Company, and Gainbridge Life Insurance Company. All three kept their Financial Strength Rating of A- (Excellent) and their Long-Term Issuer Credit Rating of “a-“.

To be precise about what happened, because the distinction matters: this was not a downgrade. The ratings were affirmed. What changed is the outlook, AM Best’s view of where the rating is likely headed over the next 12 to 36 months.

For Delaware Life, Clear Spring and Gainbridge, the outlook moved from positive to negative, which is a two-step swing in sentiment. AM Best also revised the outlook to negative from stable on Group 1001’s property and casualty companies, for an unrelated reason (adverse workers’ compensation reserve development in California).

Here is what drove the change, what has happened since, and why we are treating it the way we are.

What AM Best Actually Said

The trigger was an accounting reclassification. According to AM Best, the outlook revision “is a result of the recent reclassification of a material portion of the group’s private credit investments from unaffiliated to affiliated assets.”

The size of that reclassification is the part worth pausing on. As InsuranceNewsNet reported in publishing the AM Best action, Delaware Life’s affiliated investments changed to 42% of its portfolio from 3% as of year-end 2025. Same assets, same balance sheet, reclassified from “investments in unrelated third parties” to “investments in businesses connected to our own owner.”

That reclassification cut the group’s risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best also flagged two things beyond the numbers:

• Enterprise risk management concerns, citing “internal control weaknesses in financial reporting related to the affiliated investment reclassification.”
• An active federal investigation by the U.S. Attorney’s Office for the Southern District of New York and the U.S. Securities and Exchange Commission, focused on affiliated and related-party disclosures.

Group 1001 is controlled by Guggenheim Partners CEO Mark Walter through his TWG Global holding company. The insurers received grand jury subpoenas in February 2026 and subsequently disclosed errors in their financial reporting. Delaware Life had previously told regulators that roughly 3% of invested assets, about $1.4 billion, involved related parties. The corrected figure is more than $17 billion, per InvestmentNews.

Gainbridge Life is the direct-to-consumer arm of the same organization, selling multi-year guaranteed annuities and fixed index annuities online. AM Best assesses Gainbridge Life’s balance sheet strength as strong, a notch better than the adequate assessment it gave Delaware Life and Clear Spring, but moved the outlook to negative alongside its affiliates.

The Update Two Weeks Later: $6.5 Billion Moving Off the Books

Here is the part that has not gotten much attention, and it is arguably the most important development for annuity owners.

On August 18, 2026, Bloomberg reported that TWG Global agreed to buy up to $6.5 billion in affiliated assets from Delaware Life, with Delaware Life receiving an equivalent amount of unaffiliated assets in exchange. Clear Spring Life separately reduced related-party transactions by $90 million.

In plain English: the parent company is taking the related-party loans off the insurer’s balance sheet and swapping in third-party assets. That is exactly the “remediation plan” AM Best referenced, and AM Best was explicit that it carries execution risk. A signed agreement is not a completed swap.

Two other ratings agencies have weighed in. S&P Global Ratings affirmed Delaware Life’s A- financial strength rating and moved its outlook to negative. Fitch noted that the restated affiliated exposure ranks as the highest in its rated universe of North American life insurers for that period.

We Have Seen This Movie Before: The A-CAP Story

If the shape of this feels familiar, it should. Roughly two years ago, a different holding company put two well-known MYGA carriers through a strikingly similar sequence.

Sentinel Security Life (Utah, founded 1948) and Atlantic Coast Life (South Carolina, founded 1925) were both owned by Advantage Capital Holdings, known as A-CAP. Both were fixtures at the top of MYGA rate comparisons. And both were carrying heavy exposure to 777 Partners, a private equity firm that was itself unraveling. A-CAP had lent hundreds of millions to 777 and its portfolio companies while separately ceding blocks of business to 777’s Bermuda reinsurance arm.

The sequence went like this:

1. 2024: The rating fight. AM Best moved to downgrade both carriers. A-CAP sued AM Best in federal court to block it. The suit was later settled.
2. Late 2024 into 2025: The regulators. Utah and South Carolina ordered both insurers to stop writing new business, citing “hazardous financial conditions.” Regulators argued A-CAP used internal valuations that overstated illiquid assets, while independent audits valued the same assets materially lower. Administrative law judges in both states later stayed or overturned those orders.
3. January 23, 2026: The downgrade. AM Best cut both carriers from B++ (Good) to B (Fair) and the issuer credit rating from “bbb” to “bb+”, under review with negative implications. AM Best cited a material decline in new premium, a material increase in surrenders and outflows, and reputational damage from the publicized regulatory rulings.
4. March 13, 2026: The rescue. A-CAP signed a master transaction agreement with Oaktree Capital Management. Oaktree agreed to acquire a controlling stake in Atlantic Coast Life and to fund a surplus note investment into a newly created captive supporting Sentinel Security. Oaktree manages $223 billion. The transaction remains subject to regulatory approval and closing conditions.

How It Actually Turned Out

Honestly: better than the headlines suggested, but not without cost, and not finished.

What did not happen: Neither carrier was placed in rehabilitation or liquidation. No state guaranty association had to step in. Contracts continued to be honored, interest continued to credit, and surrenders and withdrawals continued to process.

What did happen: Roughly two years of uncertainty. Owners who wanted out early faced the same surrender charges they always would have. Both carriers also lost distribution.

My Annuity Store stopped offering Sentinel Security Life and Atlantic Coast Life for new business the day the B (Fair) rating came through, because that falls below the A-range financial strength standard we require. Both remain at B today. The Oaktree capital is committed but the deal has not closed.

The honest lesson is not “it always works out.” It is that the warning signs showed up in the ratings and the regulatory filings well before the downgrade: the outlook changes, the affiliated-asset questions, the valuation disputes. Anyone watching those signals had two years of notice.

Why the Two Situations Are Not the Same

We want to be careful here, because it would be easy to read the A-CAP history onto Group 1001 and conclude the worst. The differences are real:

• Rating level. Delaware Life, Clear Spring and Gainbridge are rated A- (Excellent). A-CAP’s carriers were at B++ before their trouble and are at B (Fair) now. That is a meaningful gap in AM Best’s assessment of claims-paying ability.
• Scale and liquidity. Delaware Life held roughly $69 billion in total assets as of March 2026; Clear Spring roughly $16 billion. A-CAP’s insurers were a fraction of that size.
• Direction of travel. A-CAP spent 2024 litigating against its rating agency. Group 1001 disclosed the errors, restated the classification, and within three weeks of the AM Best action had its parent agreeing to swap $6.5 billion of the problem assets off the insurer’s balance sheet. Cooperation is not vindication, but it is a different posture.
• No regulatory stop order. No state has ordered any Group 1001 carrier to stop writing business.

What the two situations share is the underlying question, and it is the one worth internalizing: when a private holding company owns a life insurer, whose money is really backing your guarantee, and who valued it? Affiliated-asset concentration is the mechanism in both stories.

Where My Annuity Store Stands

All three Group 1001 carriers remain rated A- (Excellent), which clears the financial strength standard we require for new business. We are not suspending them.

What we are doing:

• Noting the negative outlook on each carrier’s profile page on this site, so anyone researching Delaware Life, Clear Spring or Gainbridge sees the current picture rather than a stale rating.
• Raising it directly with clients who ask about or are considering a Delaware Life or Clear Spring contract. If you are shopping a rate from one of these carriers, we will tell you what AM Best said and why, and let you weigh it.
• Tracking the remediation. The $6.5 billion asset swap either executes or it does not. AM Best said the plan carries execution risk, and that is the thing to watch. If the rating moves below A-, our standard applies automatically, the same way it did with Sentinel and Atlantic Coast on January 23.

We monitor AM Best ratings and outlooks across the 90-plus carriers on our platform. Outlook changes matter to us, not just downgrades, because the outlook is the early signal, and the A-CAP timeline is the reason we treat it that way.

If You Already Own One of These Annuities

A negative outlook on an A- rated carrier is not a reason to panic or to surrender a contract. A few things worth knowing:

• Your contractual guarantees have not changed. The rate you locked, the surrender schedule, the income rider terms: none of that is affected by a ratings outlook.
• Surrendering early has a real, certain cost (the surrender charge and any market value adjustment) traded against a risk that is currently hypothetical. That math rarely favors a reflexive exit.
• State guaranty associations provide a backstop up to state-specific limits. That is a safety net, not a substitute for carrier strength, and it is worth knowing your state’s limit.
• Diversification is the practical answer. If a single carrier holds more of your retirement savings than you are comfortable with, that is worth addressing regardless of which carrier it is.

Jason’s Take

When Delaware Life or Gainbridge comes up on a call this week, I am not telling anyone to run. I am telling them the rating is still A- and the guarantees in an existing contract have not moved an inch. What I add is that if we are placing new money and another A-rated carrier is paying within a few basis points, I see no reason to take on a headline risk you are not being paid for.

What A-CAP changed for me is how much weight I put on who owns the insurance company and who is valuing the assets behind the guarantee. Before 2024 I mostly looked at the letter rating and the rate. Now the first questions I ask about any carrier are who owns it, how much of the portfolio is tied to that owner, and whether an independent party has priced it.

The other lesson is that the early signals were all public. The outlook changes and the affiliated-asset questions showed up long before the A-CAP downgrade, and anyone paying attention had years of notice. That is why an outlook change now gets treated in our office like an action item instead of a footnote.

Questions About a Carrier on Your Statement?

If you own an annuity with any carrier and want a straight answer about where it stands, call us at 855-277-8088 or request a free annuity audit. We will tell you what the ratings say, what changed, and what it does or does not mean for your contract. No obligation, and you keep the report either way.

Sources

• AM Best Revises Outlooks to Negative for Subsidiaries of Group 1001 Insurance Holdings, LLC – InsuranceNewsNet, July 31, 2026
• AM Best Revises Outlooks to Negative for Subsidiaries of Group 1001 Insurance Holdings, LLC – AM Best press release, July 31, 2026
• The Dodgers owner’s insurer is slashing $6.5 billion in related-party loans after a federal probe – Quartz, reporting Bloomberg, August 18, 2026
• Lakers sale spotlights Delaware Life’s $17B underreported exposure – InvestmentNews, August 13, 2026
• Oaktree grabs control of Atlantic Coast Life Co. in blockbuster A-Cap deal – InsuranceNewsNet, March 13, 2026

Ratings and outlooks referenced are current as of August 20, 2026. Always verify a carrier’s current rating at ambest.com before purchasing.

Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, tax, or legal advice. Annuity products vary by state and carrier. Always consult a licensed financial professional before making any financial decisions. My Annuity Store is an independent marketplace and does not provide investment advice. Insurance company guarantees are backed by the claims-paying ability of the issuing insurer.