OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has placed under review with developing implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of 5 Star Life Insurance Company (5 Star Life) (Lincoln, NE). 5 Star Life is a wholly owned subsidiary of Armed Forces Benefit Association (AFBA).
The under review with developing implications status reflects a reversal in the recent trend of operating losses and declining capitalization ratios that is in line with the current forecast to return to profitability and achieve stabilized capitalization ratios by year-end 2018. The improvement in operating performance is primarily related to a significant change in business strategy as 5 Star Life has shifted from high strain final expense products to worksite products, which have lower statutory strain and a shorter breakeven period. Additionally, A.M. Best notes that 5 Star’s ultimate parent, AFBA, continues to have sufficient holding company liquidity to provide ongoing capital support in the near term, including an explicit net worth maintenance agreement held for the benefit of 5 Star Life.
A.M. Best will continue to monitor 5 Star Life’s interim performance and capital trends and take appropriate rating actions as near-term results emerge.
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