OLDWICK, N.J.--(BUSINESS WIRE)--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.
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