Tag: FSR

AM Best affirms credit ratings of Ohio National Financial Services, Inc. and its subsidiaries

Post author By Michelle Dryden
Post date September 11, 2020
No Comments on AM Best affirms credit ratings of Ohio National Financial Services, Inc. and its subsidiaries

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 The Ohio National Life Insurance Company and its wholly owned subsidiary, Ohio National Life Assurance Corporation (together referred to as the Ohio National Life Group). These companies are the principal insurance subsidiaries of Ohio National Financial Services, Inc. (ONFS), which is an intermediate holding company wholly owned by Ohio National Mutual Holdings, Inc. Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of National Security Life and Annuity Company (NSLAC). Additionally, AM Best has affirmed the Long-Term ICR of “bbb+” and all existing Long-Term Issue Credit Ratings (Long-Term IR) of ONFS. The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Cincinnati, OH. (See below for a detailed listing of the Long-Term IRs).

The ratings of Ohio National Life Group reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The group’s balance sheet strength assessment is based on its risk-adjusted capitalization being at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR), while maintaining strong liquidity. AM Best notes that the group’s risk-adjusted capitalization has been enhanced by the issuance of surplus notes, and the use of captive structures to support redundant statutory reserves and to reduce volatility from its annuity living benefit riders. AM Best considers the group’s consolidated financial leverage and interest coverage ratios to be within acceptable ranges. The assessment of the group’s operating performance considers its long-term positive trend in individual life insurance sales prior to the current disruptions driven by the COVID-19 pandemic, and its stable adjusted GAAP operating results, while the assessment of the group’s ERM recognizes its strong risk management framework, including front-end risk management practices and sound governance structure.

The ratings of NSLAC reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, very limited business profile and appropriate ERM. The ratings also reflect the support of the company’s parent. The company’s balance sheet strength assessment is based on the strongest level of risk-adjusted capitalization, as measured by BCAR, and a high quality investment portfolio. NSLAC was the exclusive distributor of annuities for the group in New York, but is not writing new business currently.

The following Long-Term IRs have been affirmed with a stable outlook:

Ohio National Financial Services, Inc.—

— “bbb+” on $425 million 5.55% senior unsecured notes, due January 2030

— “bbb+” on $250 million 6.625% senior unsecured notes, due May 2031

The Ohio National Life Insurance Company—

— “a-” on $50 million 8.50% surplus notes, due May 2026

— “a-” on $250 million 6.875% surplus notes, due June 2042

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

Christopher Lewis

Financial Analyst
+1 908 439 2200, ext. 5065
christopher.lewis@ambest.com

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

Thomas Rosendale

Senior Director
+1 908 439 2200, ext. 5201
thomas.rosendale@ambest.com

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

Tags #Credit, #Ratings, AM Best, Excellent, FSR, Ohio National Financial Services Inc., Subsidiaries, Subsidiaries#Credit

Business

AM Best affirms credit ratings of BCBSM, Inc. and HMO Minnesota; revises Issuer Credit Rating outlook to negative for MII Life Insurance, Incorporated

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 BCBSM, Inc., d/b/a Blue Cross Blue Shield of Minnesota (BCBSM), and its subsidiary, HMO Minnesota, d/b/a Blue Plus (Blue Plus). In addition, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb+” on the $250 million 3.79% senior unsecured notes due 2025 issued by BCBSM. The outlook of the Credit Ratings (ratings) is stable. Both companies are domiciled in Eagan, MN.

Concurrently, AM Best has revised the outlook to negative from stable for the Long-Term ICR and affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” of MII Life Insurance, Incorporated (MII Life) (Eagan, MN). The outlook of the FSR is stable.

The ratings of BCBSM and HMO Minnesota reflect their balance sheet strength, which AM Best categorizes as strong, as well as their adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The ratings of BCBSM continue to be supported by strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). BCBSM has been able to grow capital organically, even after dividend payments in recent years, a trend that is expected to continue in the near term. Furthermore, financial flexibility is enhanced through access to Federal Home Loan Bank borrowings and lines of credit with several banks. Through mid-2020, BCBSM has reported stronger underwriting and net income with favorable results across its various core product lines. The company has very good brand name recognition and maintains a solid market position in Minnesota, with a large membership base and a diverse product portfolio. Membership gains have been robust over the most recent five-year period, and through mid-2020. Nevertheless, there is a geographic limitation to its business based on the Blue Cross Blue Shield licenses. Offsetting factors include earnings volatility and capital-position pressure from dividend payments to the parent holding company, Aware Integrated, Inc.

The ratings of MII Life reflect the company’s balance sheet strength, which AM Best categorizes as weak, as well as adequate operating performance, neutral business profile and appropriate ERM.

The revised Long-Term ICR outlook to negative for MII Life is based on continued pressure on its balance sheet strength assessment through mid-2020, driven by COVID-19-fueled market volatility. Risk-adjusted capital, as measured by BCAR, is expected to remain at the weak level in support of its current business and investment risk. In addition, the company operates in a very competitive consumer-driven health marketplace, and there continues to be concern with the underlying credit quality of some of its investment holdings and historical dependence on capital support from its parent.

MII Life ratings also consider the implicit and explicit support from its ultimate parent, Aware Integrated, Inc. The stable FSR outlook reflects MII Life’s strategic importance to the organization, as it provides opportunities for revenue and earnings diversification through health savings accounts, flexible spending accounts, voluntary employee beneficiary association and a Medicare Part D product for prescription drug coverage. MII Life also writes medical stop-loss insurance, which it reinsures to its affiliate, BCBSM. MII Life plans to discontinue the Medicare Part D product in 2021. MII Life has operated as a medical spending account administrator for over 25 years and ranks as one of the leading administrators in the United States. It also is positioned among the top voluntary employee beneficiary association administrators. The company has reported a strong growth trend by number of accounts, total deposits and revenue, with continued profitability over the past several years.

Contacts

Jennifer Asamoah
Financial Analyst
+1 908 439 2200, ext. 5203
jennifer.asamoah@ambest.com

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

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

Tags #BCBSM Inc., #Capital Adequacy Ratio, #HMO Minnesota, #ICR, #Negative, #Stable, AM Best, FSR, Issuer Credit Rating, MII Life Insurance Inc., MII Life Insurance Inc.#BCBSM Inc.

Business

AM Best affirms credit ratings of Genworth Financial, Inc. and its U.S. Life Subsidiaries

Post author By Michelle Dryden
Post date September 4, 2020
No Comments on AM Best affirms credit ratings of Genworth Financial, Inc. and its U.S. Life Subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bb+” of Genworth Life and Annuity Insurance Company (GLAIC) (Richmond, VA). Concurrently, AM Best has affirmed the FSR of C++ (Marginal) and the Long-Term ICRs of “b” of Genworth Life Insurance Company (GLIC) (Wilmington, DE) and Genworth Life Insurance Company of New York (GLICNY) (New York, NY). Additionally, AM Best has affirmed the Long-Term ICRs of “b” of Genworth Financial, Inc. (Genworth) [NYSE: GNW] and Genworth Holdings, Inc. (both domiciled in Delaware), as well as their Long-Term Issue Credit Ratings (Long-Term IR). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect GLAIC’s balance sheet strength, which AM Best categorizes as strong, as well as its weak operating performance, limited business profile and appropriate enterprise risk management.

The ratings of GLAIC also reflect its strong balance sheet strength, including the level and quality of capital, and the quality of the asset portfolio. Although absolute and risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio (BCAR), increased in 2019, many uncertainties around the strength of the balance sheet remain related to the potential for future reserve increases or asset impairments. There has been history of negative profitability in aggregate and in most lines of businesses. GLAIC calculated its risk-based capital (RBC) level at 438% at the end of 2019, an increase from the prior-year RBC score of 422%.

The ratings of GLIC and GLICNY reflect the group’s balance sheet strength, which AM Best categorizes as weak, as well as its weak operating performance, limited business profile and appropriate enterprise risk management.

The ratings of GLIC and GLICNY reflect AM Best’s view of its balance sheet strength and its operating performance. Risk-adjusted capitalization, as measured by BCAR and other capital metrics, is low and volatile. A strong offsetting factor is management’s focused strategy of garnering actuarially supported premium rate increases on in-force, long-term care policies. Management identified the need for these increases several years ago, took corrective action and has achieved meaningful results. While GNW has demonstrated success at achieving premium rate increases in the past, operating losses continue to persist due to deviation in experience relative to pricing assumptions. The impact and timing of the approval and receipt of those rate increases continue to be uncertain. GLIC calculated its RBC level at 213% at the end of 2019, an increase from the prior-year RBC score of 199%, while GLICNY’s RBC improved to 291% from 223% between 2018 and 2019.

The rating affirmations of the two holding companies, Genworth and Genworth Holdings, Inc., as well as its associated debt, reflect the ongoing challenges the operating companies face, its debt obligations and secured promissory note to settle recent dispute. Genworth has shown financial flexibility navigating through those complications, including the sale of Genworth’s stake in Genworth MI Canada, Inc. in 2019, the recent $750 million senior notes offering by Genworth Mortgage Holdings, Inc. and a potential 19.9% IPO of the U.S. mortgage insurance business. Finally, GNW continues to pursue closing the transaction with China Oceanwide Holdings Group Co. Ltd. and the $1.5 billion capital commitment, which has been delayed due to funding issues given current market challenges with COVID-19.

The following Long-Term IRs have been affirmed with a stable outlook:

Genworth Holdings, Inc. (guaranteed by Genworth Financial, Inc.)—

— “b” on $400 million 7.20% senior unsecured notes, due 2021

— “b” on $750 million 7.625% senior unsecured notes, due 2021

— “b” on $400 million 4.9% senior unsecured notes, due 2023

— “b” on $400 million 4.8% senior unsecured notes, due 2024

— “b” on $300 million 6.50% senior unsecured notes, due 2034

— “ccc+” on $600 million fixed/floating rate junior subordinated notes, due 2066

The following indicative Long-Term IRs on securities available under the universal shelf registration have been affirmed with a stable outlook:

Genworth Financial, Inc.—

–“b” on senior unsecured debt

–“b-” on subordinated debt

–“ccc+” on preferred stock

Genworth Holdings, Inc.—

— “b” on senior unsecured debt

— “b-” on subordinated debt

— “ccc+” on preferred stock

Contacts

Bruno Caron
Senior Financial Analyst
+1 908 439 2200, ext. 5144
bruno.caron@ambest.com

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

Michael Porcelli
Director
+1 908 439 2200, ext. 5548
michael.porcelli@ambest.com

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

Tags #Risk, AM Best, Financial. Strength Rating, FSR, Genworth Financial Inc., Management, U.S. Life Subsidaries, U.S. Life Subsidaries#Risk

International & World

AM Best downgrades credit ratings of Insurance Corporation of Barbados Limited; places under review with developing implications

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” from “a-” of Insurance Corporation of Barbados Limited (ICBL) (Barbados). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with developing implications.

The ratings reflect ICBL’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

This rating action follows the announcement that BF&M Limited, ICBL’s majority shareholder, has sold its 51% share ownership in ICBL to Paynes Bay Finance Inc., an investment vehicle owned and controlled by Joe Poulin through his family office, JPK Capital. The rating downgrades reflect the removal of rating enhancement that ICBL received from BF&M Limited.

Additionally, the under review with developing implications status reflects the need for AM Best to assess the new majority shareholder, its strategic plans for ICBL and the potential impact on the company’s rating fundamentals. The ratings will remain under review until AM Best has conducted detailed discussions with JPK Capital and completes its evaluation of the transaction and the implications for ICBL.

Contacts

Ricardo A. Longchallon

Senior Financial Analyst

+1 908 439 2200, ext. 5676
ricardo.longchallon@ambest.com

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

Sharon Marks
Associate Director
+1 908 439 2200, ext. 55477

sharon.marks@ambest.com

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

Tags #Risk, AM Best, Credit Rating, Financial. Strength Rating, FSR, Insurance Corporation of Barbados, Management, Management#Risk

Business

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

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 downgrades credit ratings of Globe Life Inc. and its subsidiaries

Post author By Michelle Dryden
Post date July 18, 2020
No Comments on AM Best downgrades credit ratings of Globe Life Inc. and its subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has downgraded the Financial Strength Rating (FSR) to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” from “aa-” of the key life/health subsidiaries of Globe Life Inc. (formerly Torchmark Corporation) (Globe Life) (headquartered in McKinney, TX) [NYSE:GL]. Concurrently, AM Best has downgraded the Long-Term ICR to “bbb+” from “a-” of Globe Life. AM Best also has downgraded the associated Long-Term Issue Credit Ratings (Long-Term IRs) on the debt and indicative Long-Term IRs on the securities of Globe Life Inc. The outlook of these Credit Ratings (ratings) has been revised to stable from negative (See below for a detailed listing of these companies and ratings).

The ratings of the life/health insurance subsidiaries of Globe Life reflect their balance sheet strength, which AM Best categorizes as strong, as well as their very strong operating performance, favorable business profile and appropriate enterprise risk management.

The rating downgrades reflect Globe Life’s relatively low level of risk-adjusted capitalization, as measured by Best Capital Adequacy Ratio (BCAR), for its previous balance sheet strength assessment. AM Best notes that Globe Life’s risk-adjusted capitalization has trended down in recent years and is substantially below that of similarly rated peers. In addition, statutory capital and surplus has remained relatively flat in recent years, as organic earnings were largely offset by dividends paid to its parent, which have primarily been used for share repurchases and stockholder dividends. While the overall credit quality of invested assets is good, its allocation to NAIC-2 bonds has increased in recent years. As a result, any downward credit migration caused by the pandemic will likely negatively impact Globe Life’s risk-adjusted capital position.

The ratings of Globe Life reflect its very strong operating performance over the past several years as all core lines of business have reported strong earnings annually and premium trends have been favorable. In addition, return ratios are superior to its peers and the life insurance industry averages. In addition, Globe Life maintains adequate liquidity supported by liquid assets, strong cash flows and good financial flexibility with access to capital markets, as well as short-term credit facilities if needed. The company has moderate financial leverage and strong interest coverage ratios, which are well within the guidelines for its current ratings. Globe Life also benefits from its diversified distribution platform and its niche businesses that provide life and supplemental health insurance products to the middle class and retired individuals.

The FSR has been downgraded to A (Excellent) from A+ (Superior) and the Long-Term ICRs downgraded to “a+” of “aa-” with the outlooks revised to stable from negative for the following life/health subsidiaries of Globe Life Incorporated:

Globe Life And Accident Insurance Company
American Income Life Insurance Company
National Income Life Insurance Company
Liberty National Life Insurance Company
Family Heritage Life Insurance Company of America
United American Insurance Company
Globe Life Insurance Company of New York

The following Short-Term IR has been affirmed:

Globe Life, Inc. —

— AMB-1 on commercial paper

The following Long-Term IRs have been downgraded and the outlook has been revised to stable from negative:

Globe Life, Inc. —

— to “bbb+” from “a-” on $300 million 3.80% senior unsecured notes, due 2022

— to “bbb+” from “a-” on $200 million 7.875% senior unsecured notes, due 2023

— to “bbb+” from “a-” on $550 million 4.55% senior unsecured notes, due 2028

— to “bbb-” from “bbb” on $300 million 6.125% junior subordinated debentures, due 2056

The following indicative Long-Term IRs available under the shelf registration have been downgraded and the outlook has been revised to stable from negative:

Globe Life, Inc. —

— to “bbb+” from “a-” on senior unsecured debt

— to “bbb” from “bbb+” on subordinated debt

— to “bbb-” from “bbb” on preferred stock

Contacts

Frank Walko, CPA, FLMI
Financial Analyst
+1 908 439 2200, ext. 5072
frank.walko@ambest.com

Michael Adams, CLU, FLMI
Associate Director
+1 908 439 2200, ext. 5133
michael.adams@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 AM Best, American Income Life, Best Capital Adequacy Ratio BCAR, Downgrades, Family Heritage Life, FSR, Globe Life Inc, ICRs, National Income Life, Subsidaries, United American Insurance, United American InsuranceAM Best

Business

AM Best affirms credit ratings of State Automobile Mutual Insurance Company and its operating subsidiaries

Post author By Michelle Dryden
Post date July 16, 2020

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 State Automobile Mutual Insurance Company (State Auto) and its operating subsidiaries. Concurrently, AM Best has affirmed the Long-Term ICR of “bbb-” of State Auto’s intermediate holding company, State Auto Financial Corporation (STFC) [NASDAQ: STFC]. The outlook of these Credit Ratings (ratings) is stable. All of the above companies are headquartered in Columbus, OH. (See below for a listing of the companies.)

The ratings reflect State Auto’s balance sheet strength, which AM Best categorizes as strongest, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The balance sheet assessment of strongest is derived from risk-adjusted capitalization also being at the strongest level, a high credit quality investment portfolio, favorable overall loss reserve development and adequate reinsurance protection. State Auto also benefits from the financial flexibility and access to capital afforded by its publicly traded intermediate holding company, STFC.

Operating performance has been marginal with State Auto impacted over the past five years by severe weather events, technology costs, fluctuating premium volume and above average commissions. Higher underwriting losses were experienced in 2019, largely reflecting a greater catastrophe impact influenced by adverse development of hurricane losses from the specialty segment, which remains in run off. State Auto continues to focus on risk management initiatives designed to reduce severity, along with aggressive price monitoring efforts and rate increases.

State Auto writes a diversified mix of personal and commercial lines of business. There is a fair spread of risk by geography with modest concentration in the Midwest, exposing the group to storm loss frequency. The company has maintained a formalized ERM framework that is appropriate for its size, scope and risk profile.

Positive rating action could occur if the group improves its operating results over an extended period of time, such that its operating performance assessment could be categorized as adequate rather than marginal. Negative rating action could occur if there is an occurrence of a sudden large or catastrophic loss that materially hinders risk-adjusted capitalization or if other balance sheet considerations, such as loss reserve development or underwriting leverage, trend in such a way that weakens overall balance sheet strength.

The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have been affirmed for the following operating subsidiaries of State Automobile Mutual Insurance Company:

State Auto Property & Casualty Insurance Company
Milbank Insurance Company
State Auto Insurance Company of Ohio
Patrons Mutual Insurance Company of Connecticut
Meridian Security Insurance Company
State Auto Insurance Company of Wisconsin
Rockhill Insurance Company
Plaza Insurance Company
American Compensation Insurance Company
Bloomington Compensation Insurance Company

Contacts

Chris Draghi

Senior Financial Analyst

+1 908 439 2200, ext. 5043

chris.draghi@ambest.com

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

Michelle Baurkot
Director
+1 908 439 2200, ext. 5314

michelle.baurkot@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Tags AM Best, FSR, ICRs, Midwest, State Auto, State Automobile Mutual Insurance Company, State Automobile Mutual Insurance CompanyAM Best