OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-”of Trustmark Insurance Company (Lake Forest, IL) and Trustmark Life Insurance Company of New York (Albany, NY) (collectively referred to as Trustmark Group), as well as Trustmark Life Insurance Company (Lake Forest, IL). Concurrently, A.M. Best has affirmed the Long-Term ICR of “bbb-” of the holding company, Trustmark Group, Inc. (TGI) (Lake Forest, IL) and the Long-Term Issue Credit Rating of “bb” on $75 million floating rate trust preferred securities, due 2035 ($39.9 million currently outstanding), issued by Trustmark Finance Trust I. The outlook of these Credit Ratings (ratings) is stable.
The ratings of Trustmark Group reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Trustmark Group has the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The continued favorable risk-adjusted capitalization level for its insurance and investment risks stems from relatively consistent operating gains, despite dividend payments in earlier years to the parent organization. Trustmark Group also has maintained revenue growth, continued operating profitability and a diverse business profile. The organization maintains an established national marketing niche, primarily among medium-sized employer groups offering voluntary worksite benefits.
However, Trustmark Group remains challenged by a highly competitive voluntary benefits market, which includes many national insurers. Additionally, there is growing exposure to higher risk assets. Furthermore, it is exposed to geographic concentration with more than half of its business generated in five states.
The ratings of Trustmark Life Insurance Company reflect this entity’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM.
Trustmark Life Insurance Company also has the strongest level of risk-adjusted capitalization, as measured by BCAR, similar to its affiliated companies. Its relatively consistent operating gains have been offset partially by dividend payments to its parent.
Trustmark Life Insurance Company focuses on the small-group self-funded medical market, which is extremely competitive, with carriers increasingly seeking new business in this space. As a result, revenues from the small-group self-funded medical business have been on a declining trend. Additionally, the company also has some minor exposure to higher risk assets. Furthermore, the closed blocks of disability and long-term care continue to shrink, yet remain profitable.
TGI’s business diversity reflects the operating subsidiaries’ voluntary life, supplemental health and small-group self-funded products, as well its non-insurance administrative, and wellness and health management services. The debt to capital is approximately 5.5%, with strong interest coverage at greater than 18x. The financial leverage and interest coverage are well within A.M. Best’s guidelines.
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.
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