AM Best Revises Outlooks to Negative for Central States Health & Life Co. of Omaha and Its Subsidiaries

 

OLDWICK, N.J.--()--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Central States Health & Life Co. of Omaha (Omaha, NE) and its subsidiaries, Censtat Life Assurance Company (Phoenix, AZ) and Censtat Casualty Company (Omaha, NE), collectively known as CSO.

The ratings reflect CSO’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The negative outlooks reflect an increasingly challenging operating environment within its core credit insurance product line mainly due to intense competition from other products that compete for shelf space in the auto dealer market, unfavorable auto industry trends and regulatory changes. These negative trends have resulted in a significant decline in CSO’s premiums over the past five years and has led to a decreased market share in the credit insurance market. AM Best notes CSO’s re-entry into the Medicare Supplement business in 2018, highlighted by the acquisition of an existing $80mm block of business and an agreement to manage an additional $40mm block. These actions should help to diversify the company’s product and earnings profile. However, AM Best views the Medicare Supplement business to be highly competitive and commoditized, and CSO is not expected to be profitable on this block for the next several years. AM Best will continue to monitor the company’s efforts to mitigate the premium decline in the auto dealer market, its efforts to expand into debt cancellation programs in the credit union market, as well as its progress toward establishing a trend of profitable growth in the Medicare Supplement business.

This press release relates to Credit Ratings that have been published on AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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Contacts

Prafull Jhawar, CPA
Senior Financial Analyst
+1 908 439 2200, ext. 5214

prafull.jhawar@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Thomas Rosendale
Director
+1 908 439 2200, ext. 5201

thomas.rosendale@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Contacts

Prafull Jhawar, CPA
Senior Financial Analyst
+1 908 439 2200, ext. 5214

prafull.jhawar@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Thomas Rosendale
Director
+1 908 439 2200, ext. 5201

thomas.rosendale@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

james.peavy@ambest.com