OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the issuer credit rating (ICR) outlook to stable from negative and affirmed the financial strength rating of B (Fair) and the ICR of “bb+” of Standard Life & Casualty Insurance Company (Standard Life) (Salt Lake City, UT). The outlook for the FSR remains stable.
The revised outlook reflects Standard Life’s increased premium, strategic withdrawal from the individual major medical market and focus on reducing its leverage position. Over the past few years, the decreasing trend in premium volume was the result of the company’s decision to withdraw from the individual major medical market. The trend was reversed in 2014 as a result of growth in the life insurance premium block and the short term health insurance product. Standard Life is successfully executing its planned exit from individual major medical products and has offered a short term policy to supplement the gap in coverage for those products effectively lapsing in 2015. The company had taken on significant debt to purchase real estate in 2011 and 2012. The properties were sold in 2013 to reduce the outstanding balance. Management has adopted a strategic plan to reduce the debt going forward. However, the company remains significantly leveraged.
The ratings reflect Standard Life’s risk-adjusted capital improvement and continued profitability. Moreover, the company has an established distribution network that includes solid relationships with independent marketing organizations and brokers, which contract with captive and semi-captive agents.
A positive change in ratings is unlikely in the near to medium term; however, a negative rating action could occur if the company’s revenue and earnings trend negatively over the medium term, Standard Life & Casualty incurs a material depletion in its risk-adjusted capital and surplus or financial leverage increases.
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.
Key insurance criteria reports utilized:
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for U.S. and Canadian Life/Health Insurers
This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.
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