OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of The Union Labor Life Insurance Company (ULL). The outlook of the Long-Term ICR has been revised to stable from positive, while the outlook of the FSR remains stable. ULL is a subsidiary of Ullico Inc., a holding company that offers insurance and financial products and services, with its common stock held by various labor organizations and their related benefit funds. Both companies are headquartered in the District of Columbia.
The Credit Ratings (ratings) reflect ULL’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. ULL’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is considered to be at the strongest level, supported by its absolute growth of capital and surplus over the past few years. Additionally, the company maintains a relatively conservative investment allocation, though it produces yields that are somewhat lower than the industry average. While counterparty risk is considered to be minimal, A.M. Best notes that the company has increased its reliance on the cession of premiums over the past few years.
ULL has reported favorable trends in profitability over the past few years, with its core medical stop loss business producing good metrics. Additionally, the company benefits from fee income generated by its J for Jobs and WorkAmerica separate accounts, which continue to report increasing assets under management and favorable yields relative to benchmarks. ULL continues to be a niche carrier in the Taft Hartley market, providing solutions that are valuable and innovative to its target union consumers. While ULL’s core business lines have been performing well, medical stop loss and the fees generated by a separate account have historically been the primarily drivers of profitability and growth, exposing the company to a moderate level of concentration risk. A.M. Best believes that the company could be challenged to report a sustainable level of profitable stop-loss premium growth going forward due to the highly competitive market for that product.
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