OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has upgraded the financial strength rating to B- (Fair) from C++ (Marginal) and issuer credit rating to “bb-” from “b+” of Citizens Security Life Insurance Company (Citizens Security) (Louisville, KY). The outlook for both ratings is stable.
The rating actions reflect Citizens Security’s stabilized capital position, which primarily is a result of a late 2010 reinsurance transaction whereby the company ceded most of its ordinary life insurance block. With the exit of the life insurance business, the company in 2011 has demonstrated positive operating results in its now core group accident and health (dental and vision) business line.
The rating actions further reflect A.M. Best’s belief that Citizens Security will be able to sustain this positive trend as management is now focused on profitable growth with tightened underwriting on its remaining business lines. Citizens Security also is performing an extensive review of its products to further improve operating results.
Offsetting rating factors include Citizens Security’s fluctuating capitalization levels over a five-year period, relatively higher risk appetite in its investment portfolio and the challenge to sustain premium growth in a competitive market.
Key rating drivers that may lead to further positive rating action include a prolonged trend of positive earnings from premium growth in Citizens Security’s dental and vision line, sustaining stable stronger risk-adjusted capitalization and continued reduction of risk in its investment portfolio. Key rating factors that may result in a negative rating action include deterioration in the performance of the company’s dental business, a return to unfavorable operating results and investment losses or erosion in its capital strength.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Understanding BCAR for Life/Health Insurers”; “A.M. Best Ratings & the Treatment of Debt”; “A.M. Best’s Liquidity Model for U.S. Life Insurers”; “Risk Management and the Rating Process for Insurance Companies”; and “Assessing Country Risk.” Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2011 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.