Tag: AM Best

AM Best affirms credit ratings of Highmark Inc. and most subsidiaries; upgrades credit ratings of Highmark Casualty Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Highmark Inc. (Highmark) (Camp Hill, PA) and its life/health (L/H) subsidiaries, collectively known as Highmark Inc. Group. Concurrently, AM Best has affirmed the FSRs of A (Excellent) and the Long-Term ICRs of “a” of Highmark’s dental subsidiaries, which operate under the United Concordia brand name. Additionally, AM Best has upgraded the FSR to A (Excellent) from A- (Excellent) and the Long-Term ICR to “a” from “a-” of Highmark Casualty Insurance Company (Highmark Casualty) (Pittsburgh, PA). Lastly, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of “a-” on Highmark’s existing senior unsecured notes. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and the Long-Term IRs).

The ratings of Highmark Inc. Group reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Highmark continues to maintain the strongest level of risk-adjusted capital based on contributions from its favorable operating results over the past three years. Highmark’s operating results are driven by good underwriting results in its commercial and Medicare Advantage business segments, as well as stable earnings from its medical stop loss business written mainly by HM Life Insurance Company and favorable investment income. Overall operating results over the past several years were enhanced by the proceeds from the sale of its subsidiaries, Davis Vision in 2017 and Visionworks in 2019. Premium development has been challenging for the group due to competitive and economic pressure in its primary markets. Highmark is one of the largest Blue Cross Blue Shield plans in the nation, offering health products and services in service areas across three states. Highmark has good business diversification through its medical stop loss business, national dental operations and technology platform services. Highmark also is part of an integrated delivery system with its affiliate, Allegheny Health Network, in its Pennsylvania service area, offering coordinated and high-quality cost-effective care and health insurance products. Highmark also has a well-developed and comprehensive ERM program, which is incorporated into business operations and strategic planning.

The ratings of United Concordia reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

United Concordia’s risk-adjusted capitalization has declined modestly over the past two years, as the dividends to its parent have exceeded net earnings due to the planned return of certain excess capital to its parent. Nevertheless, risk-adjusted capital presently remains at the very strong level. AM Best will continue to monitor the capitalization of the dental entities, with the expectation that they will be supported by the parent organization as needed. Finally, premium growth and operating earnings have been especially strong, driven in part by the company’s government contracts including the Federal Employees Dental and Visions Insurance Program and TRICARE Dental Plan. United Concordia has a large membership base, with almost 9 million individuals and a large national dental network with over 127,000 dentists.

The ratings of Highmark Casualty reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM.

The rating upgrades of Highmark Casualty reflect rating enhancement received based on its strategic

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importance and dependence on its affiliate, HM Life Insurance Company, from which it derives the majority of its premiums through a quota share arrangement for medical stop loss business.

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed, with stable outlooks for Highmark Inc. and its following L/H subsidiaries:

HM Health Insurance Company
HM Life Insurance Company
HM Life Insurance Company of New York
Highmark Choice Company
Highmark West Virginia Inc.

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed, with stable outlooks for the following dental subsidiaries of Highmark Inc.:

United Concordia Companies, Inc.
United Concordia Insurance Company
United Concordia Insurance Company of New York
United Concordia Dental Plans of California, Inc.
United Concordia Dental Plans of Pennsylvania, Inc.
United Concordia Dental Plans, Inc.

The FSR has been upgraded to A (Excellent) from A- (Excellent) and the Long-Term ICR to “a” from “a-”, with a stable outlook for Highmark Casualty Insurance Company, an insurance subsidiary of Highmark Inc.:

The following Long-Term IRs have been affirmed, with stable outlooks:

Highmark Inc.—

–“a-” on $350 million 4.75% senior unsecured notes, due 2021

–“a-” on $250 million 6.125% senior unsecured notes, due 2041

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Contacts

Bridget Maehr

Associate Director

+1 908 439 2200, ext. 5321

bridget.maehr@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Joseph Zazzera, MBA

Director

+1 908 439 2200, ext. 5797

joseph.zazzera@ambest.com

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Tags AM Best, Business, Credit Ratings, Financial. Strength Rating, FSR, Highmark Inc., ICRs, Life Insurance, Long-Term ICR, Risk Management, Risk ManagementAM Best

Business

AM Best affirms credit rating of reopened W. R. Berkley Corporation’s senior unsecured notes

Post author By Michelle Dryden
Post date September 3, 2020
No Comments on AM Best affirms credit rating of reopened W. R. Berkley Corporation’s senior unsecured notes

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of “a-” on the $470 million 4% senior unsecured notes, due May 2050, issued by W. R. Berkley Corporation (WRB) (Greenwich, CT) [NYSE:WRB]. The company has announced it will be issuing an additional $170 million of senior unsecured notes under that offering, bringing the total to $470 million. The outlook of the Credit Rating (rating) is stable.

Proceeds will be used for the partial redemption of WRB’s 5.625% subordinated notes, due 2053. WRB’s financial leverage and coverage metrics remain within guidelines for the rating following the increase in the principal amount of this security despite the partial replacement of the more equity-like hybrid security with senior debt, given that the senior debt component of the overall capital structure will remain within expectations. Following the partial redemption of the 2053 subordinated notes, unadjusted leverage will measure 32.4%, while adjusted leverage will measure 26.8%, reflecting equity credit for the hybrids.

Contacts

Jennifer Marshall, CPCU, ARM

Director

+1 908 439 2200, ext. 5327

jennifer.marshall@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Michael J. Lagomarsino, CFA, FRM
Senior Director
+1 908 439 2200, ext. 5810

michael.lagomarsino@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Tags #Notes, #WRB, AM Best, Credit Rating, Security, Senior, W.R. Berkley Corporation, W.R. Berkley Corporation#Notes

Business

AM Best revises outlooks to stable for Constitution Insurance Company

Post author By Michelle Dryden
Post date September 2, 2020
No Comments on AM Best revises outlooks to stable for Constitution Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Constitution Insurance Company (Constitution) (headquartered in Omaha, NE).

The Credit Ratings (ratings) reflect Constitution’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The stable outlooks consider the enhanced business profile, as Constitution has begun to expand its urban homeowners and dwelling fire books of business. In addition, Constitution now participates on a workers’ compensation quota share program with an affiliated company, which provides some product diversity. Nonetheless, Constitution still faces geographic and product concentrations, and AM Best will continue to monitor the company’s progress with its business plans and execution over the near term.

Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

Contacts

Raymond Thomson, CPCU, ARe, ARM

Director
+1 908 439 2200, ext. 5621
raymond.thomson@ambest.com

Greg Williams
Senior Director
+1 908 439 2200, ext. 5815
greg.willams@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy

Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Tags #Credit, #Financial Strength, #Rating, #Risk, #Stable, AM Best, Constitution Insurance Company, Constitution Insurance Company#Credit

Business

AM Best addresses COVID-19’s impact on Canadian insurers in market briefing

Post author By Michelle Dryden
Post date September 2, 2020
No Comments on AM Best addresses COVID-19’s impact on Canadian insurers in market briefing

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best’s Insurance Market Briefing – Canada will take place as two complimentary webinars on Sept. 9 and 10, 2020.

“AM Best’s Canadian Outlook: In the Shadow of COVID-19,” will be held on Sept. 9, from 2:00 p.m. to 3:00 p.m. (EDT). AM Best analysts will review the impact of COVID-19 on the Canadian insurance market and economy, including regulatory and monetary policies, the AM Best stress test results, innovation and other key issues and trends.

Panelists include:

Michael Adams, associate director, life/annuity, AM Best;
Ann Modica, associate director, economic & industry research, AM Best; and
Raymond Thomson, director, composite ratings, AM Best.

“Canada 2020 Hot Topics Panel Discussion,” will be held on Sept. 10, from 2:00 p.m. to 3:00 p.m. (EDT). AM Best analysts and market experts will examine significant industry issues, including the impact of COVID-19, latest innovation trends and regulatory/accounting issues that will influence the Canadian insurance market.

Panelists include:

Sridhar Manyem, director, industry research, AM Best;
Gordon McLean, senior financial analyst, property/casualty, AM Best;
David Sloan, chief executive officer, Canada reinsurance solutions, AON; and.
Ron Stokes, partner, Ernst & Young.

Attendees can submit advance questions during registration or by emailing webinars@ambest.com. Playback will be available to registered viewers shortly after the event.

Contacts

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Tags #Impact, #Outlook, AM Best, Analysts, Canadian, COVID-19, Economy, Insurers, market, Review, Review#Impact

Business

AM Best removes from under review with positive implications and upgrades credit ratings of Moda Health Plan, Inc. and Oregon Dental Service

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has removed from under review with positive implications and upgraded the Financial Strength Rating (FSR) to B++ (Good) from B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “bb” of Moda Health Plan, Inc. (Moda Health). Concurrently, AM Best has removed from under review with positive implications and upgraded the FSR to B++ (Good) from B (Fair) and the Long-Term ICR to “bbb+” from “bb” of Oregon Dental Service (ODS). Both companies are domiciled in Portland, OR. The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings of Moda Health reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile, appropriate ERM and support of its owners.

The rating upgrades for Moda Health reflects the improvement in absolute capital during the third quarter of 2020 and in its estimated Best’s Capital Adequacy Ratio (BCAR). In April 2020, the U.S. Supreme Court ruled that the federal government is required to pay health insurers for the amounts owed under the Patient Protection and Affordable Care Act’s Risk Corridors program. Moda Health had been party to a lawsuit suing the federal government and recently recovered payment of $248.9 million for damages incurred during 2014-2016. Furthermore, with the increased level of capital, AM Best expects Moda’s debt leverage and financial flexibility to substantially improve. Moda Health had issued external surplus notes, which previously comprised a sizable portion of the company’s capital and surplus.

The ratings of ODS reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The rating upgrades for ODS reflect the improvement in its estimated Best’s Capital Adequacy Ratio (BCAR) as well as the improvement in the financial flexibility and fungibility of capital within the ODS organization, driven by the sizeable payment from the federal government to Moda Health. ODS maintains a 50.5% ownership in its subsidiary, Moda Health, following its sale of its remaining shares of common stock to Delta Dental of California (DDC) and formation of its strategic partnership that closed in 2019.

Contacts

Jeffrey Lane
Senior Financial Analyst
+1 908 439 2200, ext. 5567
jeffrey.lane@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Wayne Kaminski
Senior Financial Analyst
+1 908 439 2200, ext. 5061
wayne.kaminski@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Tags #Improvement, #Strength, #Upgrades, AM Best, Credit Ratings, Dental, Implications, Moda Health Plan Inc., Positive, Review, Review#Improvement

Business

AM Best affirms credit ratings of American Federated Insurance Company and American Federated Life Insurance Company

Post author By Michelle Dryden
Post date August 22, 2020
No Comments on AM Best affirms credit ratings of American Federated Insurance Company and American Federated Life Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Ratings of “bb” of American Federated Insurance Company (AFIC) and American Federated Life Insurance Company (AFLIC). The outlook of these Credit Ratings (ratings) is stable. Both companies are known collectively as American Federated Insurance Companies and are domiciled in Flowood, MS.

The ratings of AFIC reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management (ERM). The ratings also reflect drag from the parent holding company, First Tower Finance Company LLC (First Tower Finance).

The ratings of AFLIC reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and marginal ERM. The ratings also reflect drag from the parent holding company, First Tower Finance.

The American Federated Insurance Companies are indirect, wholly owned subsidiaries of First Tower Finance, a multiline specialty finance company. Prospect Capital Corporation [NASDAQ: PSEC], a publicly traded closed-end investment company, indirectly owns an 80.1% majority interest in First Tower Finance and its subsidiaries.

AFIC provides credit insurance coverage on collateralized personal loans originated by the consumer finance subsidiaries of First Tower Finance, and involuntary unemployment insurance.

AFLIC provides credit life and credit accident and health insurance coverages for individuals that have personal loans originated by the consumer finance subsidiaries of First Tower Finance. Given the products offered by the two companies, AM Best will continue to monitor the potential effects of COVID-19 and the macroeconomic environment on the business profiles and operations of AFIC and AFLIC.

The drag to the ratings of AFIC and AFLIC reflects the considerable financial leverage with a deficit in members’ equity at First Tower Finance, stemming from a 2014 transaction involving the return of First Tower Finance’s capital to its members.

Contacts

Jeffrey Stary

Financial Analyst
+1 908 439 2200, ext. 5689
jeffrey.stary@ambest.com

Raymond Thompson, CPCU, ARe, ARM
Director
+1 908 439 2200, ext. 5621
raymond.thompson@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Tags #AFIC, #AFLIC, #Stable, AM Best, American Federated Insurance Company, American Federated Life Insurance Company, Business, Collateral, Credit Ratings, Finance, Finance#AFIC

Business

AM Best: Pandemic, economic issues dampen Chile insurance market (AM BestTV)

Post author By Michelle Dryden
Post date August 22, 2020
No Comments on AM Best: Pandemic, economic issues dampen Chile insurance market (AM BestTV)

OLDWICK, N.J.–(BUSINESS WIRE)–In this episode of ^AMBestTV, Eli Sanchez, associate director, AM Best, said the rating agency’s negative market segment outlook on Chile’s insurance sector is based on declines in insurance activity, tied to the pandemic and longer-running economic issues. Click on http://www.ambest.com/v.asp?v=chileoutlook_english720 to view the entire program.

Sanchez addressed to what extent COVID-19 is affecting insurers in Chile.

“As of March 2020, there has been a 10% contraction in the overall insurance industry,” said Sanchez. “There was a contraction of around 1.8% last year. AM Best has seen declines, especially in the life side, related to annuities, some accident and health, as well as the property/casualty segment. Additionally, there has been lower economic activity. As of May, the monthly economic indicator contracted by approximately 15%. That puts a lot of pressure on underlying industries that use insurance as a way of protecting its relative assets.”

Chile is having economic problems that the pandemic has exacerbated. Sanchez spoke about how COVID-19 has affected insurers’ ability to grow.

“With lower global economic activity, there have been tensions, specifically commercial tensions between China and the United States. These countries are important partners for Chile. These tensions have created a lot of flight to quality, which have threaten the Chilean peso. In addition, with the tensions in trade, copper prices have come down. That limits a lot of the growth that could happen in the country, which in turn affects a lot that could happen in the demand for insurance.”

To view this video in Spanish, please go to http://www.ambest.com/v.asp?v=chileoutlook_spanish720.

To access the related market segment report, titled, “Market Segment Outlook: Chile Insurance,” please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=532765.

Recent ^AMBestTV coverage includes:

AM Best: Cyber Insurance Profitability Challenged by New Risks: AM Best analysts say standalone cyber insurance premiums are growing as companies reduce silent cyber risk: http://www.ambest.com/v.asp?v=ambcyber720.
BDO Director: Companies Should Review Hurricane Response Plans: The COVID-19 pandemic adds a layer of complexity to hurricane response plans, said James MacDonnell, director of crisis management/ business continuity at BDO, an advisory firm: http://www.ambest.com/v.asp?v=macdonnell820.
ITC Conference Expands to Month Long ‘Celebration of Insurtech Innovation’: InsureTech Connect is launching ‘ITC September to Remember’ leading up to its flagship global conference, said Mee-Jung Jang, president, InsureTech Connect: http://www.ambest.com/v.asp?v=itc820.
Allianz: Docked Cruise Ships in Hurricane-Prone Areas Are ‘Hot Spots’ to Watch: Cruise ships grounded due to the pandemic are among risks requiring “constant vigilance,” said Andrew Kinsey, senior marine risk consultant, Allianz Global Corporate & Specialty: http://www.ambest.com/v.asp?v=covidshipping820.

^AMBestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at www.ambest.com/multimedia/ambtvsignup.html. View ^AMBestTV episodes at www.ambest.tv.

Contacts

Lee McDonald
Group Vice President, Publication and News Services
+1 908 439 2200, ext. 5561
lee.mcdonald@ambest.com

Tags #Issues, #Pandemic, #Peso, #Risks, AM Best, AM BestTV, Chile, China, COVID-19, economic, Insurance, prices, prices#Issues

Business

AM Best downgrades credit ratings of Armed Forces Insurance Exchange

Post author By Michelle Dryden
Post date August 21, 2020
No Comments on AM Best downgrades credit ratings of Armed Forces Insurance Exchange

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” from “bbb” of Armed Forces Insurance Exchange (AFIE) (Leavenworth, KS). The outlooks of these Credit Ratings (ratings) has been revised to stable from negative.

The ratings reflect AFIE’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

AFIE historically had an appropriate ERM program, but AM Best has called the effectiveness of this program into question due to significant volatility in operating results and declining surplus. The further surplus deterioration into 2019 and 2020 as a result of negative operating results supports AM Best’s assessment of AFIE’s ERM as marginal.

Contacts

David Braisted
Financial Analyst
+1 908 439 2200, ext. 5120
david.braisted@ambest.com

Christopher Sharkey

Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Joseph Burtone
Director
+1 908 439 2200, ext. 5125
joseph.burtone@ambest.com

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Tags #Balance Sheet, #Stable, AM Best, Armed Forces Insurance Exchange, Business, Credit Ratings, Financial, Financial#Balance Sheet

Business

AM Best affirms credit ratings of American International Group, Inc. and most subsidiaries; downgrades Issuer Credit Ratings of life/health subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of American International Group, Inc. (AIG) (headquartered in New York, NY) [NYSE: AIG]. AM Best also has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICRs of “a” of its property/casualty insurance subsidiaries (collectively referred to as AIG PC). The outlook of these Credit Ratings (ratings) is stable. Concurrently, AM Best has downgraded the Long-Term ICR to “a” from “a+” and affirmed the FSR of A (Excellent) for the members of the AIG Life & Retirement Group (AIG L&R). The outlook of the Long-Term ICR has been revised to stable from negative, while the outlook of the FSR is stable. (Please see below for a detailed listing of the companies and ratings.)

AIG’s ratings reflect its consolidated risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), which is an improvement from the very strong level seen in the 2019 review period. Additionally, consolidated risk-adjusted capital is likely to improve now that the Fortitude Reinsurance Company Ltd. (Fortitude RE) transaction has closed. While the closing of Fortitude RE brought with it significant write-downs during 2020, these write-downs did not impact the general insurance or life and retirement statutory entities, and cash flow is still expected to be positive. Overall, AM Best views this transaction as positive for AIG as it sheds longer-tail risk liabilities, along with potentially riskier, longer-duration assets paired with those reserves. Access to the capital markets and significant liquidity at the holding company level also aids the balance sheet. An offsetting factor in the balance sheet strength assessment is the increase in financial leverage and a lower interest coverage ratio expected for 2020.

AIG’s historical operating performance has been hampered by significant losses in general insurance, but the company has made strides in refining its risk profile and AM Best expects further improvement. AIG’s business profile is global, with a distinctly diverse set of property/casualty and life and annuity products, a broad distribution network and significant market share on many of its lines of business.

The ratings of AIG PC reflect the group’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, favorable business profile and appropriate enterprise risk management (ERM).

AIG PC’s risk-adjusted capital position improved in 2019, reflective of a material reduction in net loss reserves as the group continues to pay down claims for older accident years. The group’s balance sheet strength continues to benefit from reinsurance support from highly rated companies. Offsetting these positive factors is the continued reduction in surplus levels that have decreased in each of the past five years, as well as the group’s high gross underwriting leverage, which has risen in recent years as a result of increased use of reinsurance to curb volatility and increase underwriting profitability.

AM Best views AIG PC’s operating performance as marginal. The group has been materially impacted over the last five years by underwriting losses and a reduction in investment income, leading to a five-year operating ratio of 102.1 that continues to lag the commercial casualty composite performance over the same time period by a considerable margin. However, AM Best notes that the group’s operating performance has demonstrated a steadily improving trend for the past three calendar years, attributable to numerous underwriting and risk management initiatives, as well as positive pricing momentum in most key business lines. The potential for further improvement in the near term is reduced by uncertainty related to the COVID-19 pandemic, which could dampen growth opportunities, increase underwriting losses and creates the possibility of investment impairments.

The ratings of AIG L&R ratings reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its strong operating performance, favorable business profile and appropriate ERM.

The Long-Term ICR downgrade reflects a revision in AM Best’s assessment of the AIG L&R’s operating performance to strong from very strong. AM Best believes the group’s more-recent returns, and prospective returns, will be more in line with its strong rated peers, driven by intense competition within the annuity segment and record low interest rates, both of which are likely to continue to drive spread income and fee income lower. In addition, the low interest rate environment is likely to negatively impact the top and bottom lines within the individual and group annuity segments.

AIG L&R’s balance sheet assessment remains stable at adequate, and its year-over-year risk-adjusted capital position remains virtually unchanged at year-end 2019. The risk-adjusted capital position benefits from the large modified coinsurance agreement with Fortitude RE, which reduces much of the risk from the longer-term structured settlements book of business. AIG L&R has had a high dividend payout ratio back to the parent due in large part to a series of de-risking practices, which has lowered the need for additional capital, but overall capital and surplus growth has been limited. Going forward, the parent holding company may become less reliant on AIG L&R dividends due its recent sale of Fortitude RE, increased liquidity and improving performance within its general insurance segment. AIG L&R’s ratings also reflect its favorable business profile with a diverse set of product offerings and national reach with its robust distribution network.

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed with stable outlooks for the following subsidiaries of AIG, which are collectively referred to as the AIG Property Casualty Insurance Group:

National Union Fire Insurance Company of Pittsburgh, PA
American Home Assurance Company
Lexington Insurance Company
Commerce and Industry Insurance Company
AIG Property Casualty Company
The Insurance Company of the State of Pennsylvania
New Hampshire Insurance Company
Illinois National Insurance Company
AIG Specialty Insurance Company
AIU Insurance Company
AIG Assurance Company
AIG Insurance Company – Puerto Rico
AIG Insurance Company of Canada
AIG Insurance Hong Kong Limited
Granite State Insurance Company
Tudor Insurance Company
Stratford Insurance Company
Western World Insurance Company
Blackboard Specialty Insurance Company
Blackboard Insurance Company
American International Group UK Limited
American International Reinsurance Company, Ltd.
AIG Asia Pacific Insurance Pte. Ltd.
Validus Reinsurance, Ltd.
Validus Reinsurance (Switzerland) Ltd.

The Long-Term ICRs have been downgraded to “a” from “a+” and the FSR of A (Excellent) affirmed, with the outlook of the Long-Term ICR revised to stable from negative and the FSR outlook maintained as stable, for the following operating subsidiaries of AIG, which are collectively referred to as the AIG Life & Retirement Group:

AGC Life Insurance Company
American General Life Insurance Company
United States Life Insurance Company in the City of New York
The Variable Annuity Life Insurance Company

Contacts

Gregory Dickerson
Associate Director—P/C
+1 908 439 2200, ext. 5161
gregory.dickerson@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Erik Miller
Associate Director—L/H
+1 908 439 2200, ext. 5187
erik.miller@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Tags #Credit, #Financial Strength, #Life, #Rating, AM Best, American International Group Inc., Business, health, Retirement, Subsidiaries, Subsidiaries#Credit

Business

AM Best affirms credit ratings of Fidelity Life Association, A Legal Reserve Life Insurance Company

Post author By Michelle Dryden
Post date August 20, 2020
No Comments on AM Best affirms credit ratings of Fidelity Life Association, A Legal Reserve Life Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Fidelity Life Association, A Legal Reserve Life Insurance Company (FLA) (Chicago, IL). The outlook of these Credit Ratings (ratings) is stable. FLA is a wholly owned subsidiary of Vericity, Inc. (Vericity or the Company).

The ratings reflect FLA’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

FLA has maintained the strongest level of risk-adjusted capitalization, even though total capital and surplus has been declining for the past couple of years. Reinsurance leverage remains high against industry trends, as the company continues to utilize reserve financing as part of its capital structure. While AM Best considers the operating performance results to be adequate, operating performance in 2019 was impacted by a portion of non-recurring costs associated with the initial public offering. Direct premiums written remained strong and have been increasing steadily, with somewhat improved return on equity from prior years, but still lags behind the industry average.

On Aug. 7, 2019, Vericity completed the initial public offering of its common stock, and as a result of the conversion, it became the holding company for converted Members Mutual Holding Company and its indirect subsidiaries, including Fidelity Life Association and eFinancial, LLC, and began trading on the Nasdaq Capital Market under the symbol VERY. The completed Subscription Rights Conversion raised $148.8 million. A majority of the net premiums written are associated with ordinary life products and tend to have higher lapses than the industry average. The Company’s strategic alliance with affinity partners has added client growth, creating an opportunity for value-added capital deployment.

Contacts

Igor Bass

Financial Analyst

+1 908 439 2200, ext. 5109

igor.bass@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Anthony McSwieney
Senior Financial Analyst
+1 908 439 2200, ext. 5715
anthony.mcswieney@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Tags #Public, #Stock, A Legal Reserve Life Insurance Company, AM Best, Business, Credit Ratings, Fidelity Life Association, Financial, Premiums, Risk Management, Risk Management#Public