OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of The Chesapeake Life Insurance Company (Chesapeake) (Oklahoma City, OK), the core insurance subsidiary of HealthMarkets, Inc. (HealthMarkets) (headquartered in North Richland Hills, TX). Additionally, A.M. Best has affirmed the Long-Term ICR of “bb” of HealthMarkets. The outlook of these Credit Ratings (ratings) is stable.
The rating affirmations reflect Chesapeake’s continuing trend of premium growth, return to profitability and improved risk-adjusted capitalization. Chesapeake is the sole writer of new insurance premium for HealthMarkets. The growth of HealthMarkets Insurance Agency, Inc., Chesapeake’s affiliated company and distribution channel, combined with the growth of third-party agency distribution, has resulted in Chesapeake’s continued premium growth in recent years.
Chesapeake has maintained solid risk-adjusted capital levels with recent improvement primarily due to an increased level of earnings. The ratings also reflect that Chesapeake's supplemental insurance portfolio was rebranded as SureBridge and the organization has exited products regulated by the Patient Protection and Affordable Care Act.
A.M. Best has some concern that a sizable portion of Chesapeake’s business is generated by HealthMarkets Insurance Agency; however, increased business is being produced by third-party distributors.
In addition, Chesapeake reinsures most of its life business primarily with one carrier, which results in a high level of reinsurance leverage. Furthermore, A.M. Best notes that HealthMarkets’ unadjusted financial leverage of more than 50% remains high relative to other companies of its size.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
