OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the Financial Strength Rating to B+ (Good) from B (Fair) and the Long-Term Issuer Credit Rating to “bbb-” from “bb+” of BEST Life and Health Insurance Company (BEST Life) (Austin, TX). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The rating upgrades reflect BEST Life’s evolving business strategy, improved near-term earnings and maintenance of a favorable level of risk-adjusted capital. Over the last few years BEST Life shifted its business strategy, exiting the unprofitable medical and stop loss lines of business to focus on primarily dental and ancillary lines of business. As the company began to exit these lines and shift to more profitable dental products, this improved its risk-adjusted capitalization. While the level of absolute capital remains relatively modest, BEST Life has experienced a growth trend over the last few years. Supporting this capital growth are the near-term earnings, which have improved, driven by the profitability in the dental line of business.
Offsetting rating factors include a lack of product and geographic diversification as the vast majority of the company’s net premium is derived from the dental line of business and over one-half is derived from six states. Additionally, the dental market is highly competitive with larger carriers able to bundle dental with their core products, potentially resulting in pricing pressure and membership losses. Furthermore, there is some uncertainty in the Affordable Care Act marketplace, which could negatively impact BEST Life’s top line.
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