OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has removed from under review with developing implications and affirmed the financial strength rating of A- (Excellent) and the issuer credit ratings (ICR) of “a-” of Madison National Life Insurance Company, Inc. (Madison National) (Madison, WI), Standard Security Life Insurance Company of New York (Standard Security) (New York, NY) and Independence American Insurance Company (Independence American) (New Castle, DE), all subsidiaries of Independence Holding Company (Independence Holding) (headquartered in Stamford, CT) [NYSE: IHC]. Concurrently, A.M. Best has removed from under review with developing implications and affirmed the ICR of “bbb-” of Independence Holding. The outlook assigned to each rating is stable.
The actions follow the recent public announcement by Independence Holding that it has completed the transaction to co-insure the in-force stop–loss business of Standard Security and Independence American produced by IHC Risk Solutions to Swiss Re Corporate Solutions Ltd. The transaction proceeds were $152.5 million in cash. The transaction benefited Independence Holding’s equity, however, significantly weakened the organization’s business profile, as the stop-loss business represented over 40% of premiums in 2015. Although the remaining premium, mainly comprised of fully insured supplemental health and disability products, is diversified geographically and by product, A.M. Best is concerned that a lack of scale in these lines of business may put pressure on future earnings. However, following the stop-loss transaction, the level of absolute and risk-adjusted capitalization at the insurance subsidiaries is expected to improve and remain more than sufficient to support the organization’s existing business risks and potential future growth.
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