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 the U.S. life/health (L/H) subsidiaries of Assurant, Inc. (Assurant) (headquartered in New York, NY) [NYSE: AIZ], which comprise the organization’s domestic and foreign preneed life insurance business, as well as a portion of its credit life and health insurance operations. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of the companies and ratings.) Concurrently, A.M. Best has revised the outlooks to negative from stable and affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” of Union Security Insurance Comp any (USIC) (headquartered in Kansas City, MO) and Union Security Life Insurance Company of New York (USLICNY) (Fayetteville, NY).
Assurant’s domestic and Canadian preneed companies — American Memorial Life Insurance Company (American Memorial) (Rapid City, SD) and Assurant Life of Canada (ALOC) (Toronto, Canada) —make up the majority of Assurant’s Global Preneed business segment.
The ratings of American Memorial reflect its balance sheet strength, which A.M. Best categorizes as adequate, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM). American Memorial is one of the largest writers of preneed life insurance in the United States and has experienced favorable premium growth trends over the past five years while obtaining profitability metrics above industry averages. A.M. Best notes that American Memorial’s preneed business sales are tied largely to one distribution channel, which exposes the segment to significant concentration risk. However, A.M. Best notes that the company has added new product offerings in recent periods, including its final need insurance product line, which is marketed through a separate distribution channel. American Memorial also maintains a more-elevated exposure to higher risk and less liquid assets, including below investment grade bonds and commercial mortgage loans, in its investment portfolio than Assurant’s other L/H insurance entities. The company has taken steps to reduce this exposure over the past year, as the percentage of below investment grade bonds has declined to approximately 95% of capital and surplus at year-end 2017 from over 150% at year-end 2016.
The ratings of ALOC reflect its balance sheet strength, which A.M. Best categorizes as strong, as well as its strong operating performance, neutral business profile and appropriate ERM. ALOC is the leading writer in the Canadian preneed market and maintains good geographic diversity within Canada’s provinces. A.M. Best also notes that distribution is much more diverse within the Canadian operations. The company also has experienced favorable operating trends including consistent premium growth and positive operating gains although earnings have been pressured by the low interest rate environment.
The ratings of Assurant’s credit life and health insurance companies — American Bankers Life Assurance Company of Florida (Miami, FL) and Caribbean American Life Assurance Company (San Juan, PR) — reflect their balance sheet strength, which A.M. Best categorizes as strong, as well as their strong operating performance, limited business profile and appropriate ERM. While premiums have declined in the domestic U.S. segment due to regulatory changes affected credit insurance sold through banks and credit cards, Assurant remains a leader in segments of the credit insurance markets in Canada and Puerto Rico where they have maintained relationships with major banks in these two countries. Premiums increased noticeably in Canada over the past year due to the addition of a large new client where most of the risk is retained by Assurant. Risk-adjusted capitalization also remains strong despite declining levels of absolute capital over the past several years due to dividends paid to the holding company, and a contracting business profile.
The ratings of USIC and USLICNY, which had historically housed the employee benefits business prior to its sale to Sun Life Financial, Inc. (Sun Life) in March 2016, reflect their balance sheet strength, which A.M. Best categorizes as strong, as well as their adequate operating performance, neutral business profile and appropriate ERM. The change in the outlook to negative largely reflects the recent changes to the business profile of the company, including the sale of its employee benefits block of business and the runoff of the preneed business in this group. The ratings also consider the relatively high creditworthiness of the remaining runoff preneed insurance business, which continues to contribute favorable operating results despite pressures from the low interest rate environment. In addition, A.M. Best expects these entities to remain well-capitalized and supported by Assurant, as needed. Additionally, USIC and USLICNY, per the terms of the transaction agreement, will continue to write employee benefits business that will be 100% ceded to Sun Life for a period of time. A.M. Best will continue to monitor the runoff of the remaining business in these entities, with a focus on profitability, capital adequacy and implicit and explicit support, as well as any changes in the operational and strategic use at these legal entities.
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have been affirmed with stable outlooks for the following L/H subsidiaries of Assurant, Inc.:
- American Memorial Life Insurance Company
- American Bankers Life Assurance Company of Florida
- Caribbean American Life Assurance Company
- Assurant Life of Canada
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have been affirmed with negative outlooks for the following L/H subsidiaries of Assurant, Inc.:
- Union Security Insurance Company
- Union Security Life Insurance Company of New York
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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