OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Ameritas Life Insurance Corp. (Lincoln, NE) and Ameritas Life Insurance Corp. of New York (New York, NY). These insurance entities comprise the life/health operations of Ameritas Mutual Holding Company (all companies collectively referred to as Ameritas). Concurrently, AM Best has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of “a-” on the group’s surplus notes ($49.9 million outstanding). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Ameritas’ balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
Ameritas maintains the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, which is further supported by strong liquidity metrics and financial flexibility. Financial and operating leverage are modest for the organization and consist primarily of a modest amount of surplus notes, as well as Federal Home Loan Bank borrowings. The organization continues to maintain a somewhat conservative investment profile, with the largest portion of its assets allocated to higher quality corporate bonds, and a modest exposure to below investment grade bonds relative to the industry and similarly rated companies. While Ameritas has a material allocation in mortgages and real estate-related assets relative to total capital, impairments related to these asset classes have been very modest. Commercial mortgage holdings generally have a low average loan size, favorable loan-to-value ratios and the majority are written with personal guarantees (i.e., with recourse).
Ameritas’ operating performance has been adequate, though moderate one-time impacts and an uptick in mortality have impacted earnings somewhat in recent years. Premium growth has been favorable over the most-recent five-year period, driven by acquisitions and organic development. Additionally, strong persistency metrics and a steady stream of net investment income have added to earnings reported on a statutory and GAAP basis. However, AM Best notes Ameritas has been somewhat dependent on the group and individual dental business for earnings generation and would like to see increased diversity of earnings throughout the organization going forward.
Ameritas continues to be a top-three player in its core dental insurance market, with a growing presence as an individual life insurance and annuity carrier. The company maintains diverse business segments and products with distribution capabilities that continue to support the organization’s favorable business profile. Additionally, Ameritas continues to work on enhancement of products and customer experience through various innovative initiatives. The organization continues to further develop and evolve its ERM program and AM Best believes its risk management capabilities are well-matched to its profile of insurance, investment and regulatory-related risks.
The following Long-Term IR has been affirmed:
The Union Central Life Insurance Company (merged into Ameritas Corp.
effective July 1, 2014)—
-- “a-” on $50 million 8.20% surplus notes, due 2026
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