OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of American Republic Insurance Company, American Republic Corp Insurance Company, Medico Corp Life Insurance Company, Medico Insurance Company and Medico Life and Health Insurance Company, the insurance subsidiaries of American Enterprise Group, Inc. (American Enterprise) (all of which are domiciled in Des Moines, IA). Additionally, A.M. Best has upgraded the FSR to A- (Excellent) from B++ (Good) and the Long-Term ICR to “a-” from “bbb+” of Great Western Insurance Company (Great Western) (Ogden, UT). The outlook of these Credit Ratings (ratings) is stable.
The rating affirmations of the insurance subsidiaries of American Enterprise reflect the group’s 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.
American Enterprise’s balance sheet assessment is driven predominantly by its high level of risk-adjusted capital. Additionally, its investment portfolio has low exposure to interest rate-sensitive reserves and is moderately conservative. However, exposure to mortgage loans has increased with the addition of the Great Western mortgage portfolio. American Enterprise historically has reported favorable operating trends with premium growth and continued profitability. Statutory losses for the consolidated group in 2017 were related to a one-time reserve charge reported by Great Western. Operating results are expected to be favorable going forward, with the acquisition of Great Western being accretive to operating results. American Enterprise operates mostly in its niche senior protection product market with an emphasis on Medicare supplemental business. The addition of Great Western’s pre-need and final expense products broadens the organization’s product portfolio. The group’s in force business remains concentrated in Medicare supplemental; however, due to competitive pressures new sales is being derived more from its dental and critical illness lines, along with the newly acquired pre-need and final expense lines. The group has well-established and diverse distribution channels. However, there is a lack of unified branding of its products. American Enterprise has a developed risk management process, and there is work being undertaken to increase the depth of its program.
The ratings of Great Western reflect its strategic role to American Enterprise as the core writer of pre-need and final expense products. All of Great Western’s business is ceded to its immediate parent, American Republic Insurance Company.
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