Noting the company’s diversified business profile, large excess surplus and solid-risk adjusted capitalization, A.M. Best has affirmed the ratings of The Penn Mutual Life Insurance Co. and its Delaware-based subsidiary.

The ratings company announced that it has affirmed the financial strength rating of “A+” (Superior) and issuer credit ratings of “aa-” of Horsham, Pa.-based Penn Mutual and its subsidiary, The Penn Insurance and Annuity Co. of Wilmington, Del. The outlook for all ratings is “stable.”

A.M. Best noted that Penn Mutual’s large excess surplus position and solid risk-adjusted capitalization has benefited from generally positive operating trends and a conservative fixed-income investment portfolio hat has performed “reasonably well.” The ratings service said it has observed that most mutual life insurers have weathered economically difficult times more effectively that their publicly traded counterparts.

Penn Mutual’s diversified business profile was also acknowledged, as it markets a variety of life insurance products including whole life, term life, fixed universal life and variable universal life policies. A.M. Best noted that both fixed and variable annuity products “compliment [the company’s] core ordinary life businesses.”

A.M. Best also recognized the company’s “well-established affluent market presence developed through its focus on relationship-oriented producers and its well defined investment hedging programs, asset/liability management and cash flow analysis techniques.”

Partially offsetting these positive factors, it said, are the challenges Penn Mutual faces to sustain and improve its operating performance.

A.M. Best noted several factors in recent years, including the company’s decision to self fund AXXX reserving requirements; the effects of the current low interest environment; and the recent performance of the credit and equity markets.

The ratings service also acknowledged that Penn Mutual maintains elevated exposure to the commercial mortgage market relative to its total-adjusted surplus through its investments in commercial mortgage-backed securities.

“While these securities are almost entirely concentrated in the highest rated tranches, are earlier vintages and have a high degree of subordination, A.M. Best believes Penn Mutual is susceptible to moderate investment losses should the commercial mortgage market continue to soften,” it said. “However, Penn Mutual’s ability to hold these securities to maturity and its strong surplus position partially mitigates A.M. Best’s concerns.”