OLDWICK, N.J.--()--A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Trustmark Insurance Company, Trustmark Life Insurance Company (Trustmark Life) (both domiciled in Lake Forest, IL) and Trustmark Life Insurance Company of New York (Trustmark Life NY) (Albany, NY) (collectively referred to as Trustmark).
Concurrently, A.M. Best has affirmed the ICR of “bbb-” of the holding company, Trustmark Group, Inc. (Trustmark, Inc.) and the debt rating of “bb” on $75 million floating rate trust preferred securities due 2035 ($39 million outstanding) issued by Trustmark Finance Trust I. The outlook for all ratings is stable.
The rating affirmations reflect the organization’s favorable risk-adjusted capitalization, profitable operating results and the overall diversity of its insurance offerings. Additionally, Trustmark continues to report strong premium growth and profitability in its core voluntary benefits segment, despite a challenging economic environment. Trustmark is positioning itself for revenue growth in its core businesses to outpace the revenue from non-core or divested segments.
Trustmark Life continues to have a fair amount of risk related to in-force business within the group health market, primarily in its group major medical business. As the Trustmark organization moves through its transition process, it has become less reliant on group major medical business for revenue and operating earnings than in the past. Historically, the group major medical market always has been volatile, and recently, has become increasingly difficult on a state and national regulatory basis. In recent years, Trustmark has made a conscious effort to grow its non-insurance risk segments, such as third party administrative services through its CoreSource division. In February 2010, the Trustmark organization acquired Health Fitness Corporation to use as a platform for its consumer health advice services.
Trustmark, Inc.’s debt-to-capital ratio is approximately 12.6%, which is considered low and it maintains ample interest coverage.
Trustmark’s ratings are well positioned at their current level. Factors that could result in negative rating actions include adverse trends in capital, growth of its voluntary line of products below A.M. Best’s expectations or challenges to grow its small group stop-loss business.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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