OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Florida Combined Life Insurance Company, Inc. (FCL) (Jacksonville, FL). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect FCL’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also reflect the company’s strategic importance to GuideWell Mutual Holding Corporation (GuideWell) and recognize the inherent benefits FCL derives as a subsidiary of GuideWell.
FCL’s balance sheet strength is underpinned by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the balance sheet strength assessment considers the company’s good liquidity measures, offset by significant reinsurance dependence as 100% of the policies are reinsured to an external company.
FCL’s operating performance has been volatile over the most recent five-year period, but improved in 2019. Higher operating losses in 2018 primarily were driven by the health insurer fee, as well as a one-time tax payment on FCL’s distribution of its share of Life and Specialty Ventures, LLC. AM Best expects prospective operating performance to remain volatile due to the company’s business model. Since a significant portion of the business is ceded, the company’s primary source of earnings are driven by investment income, which has been impacted by lower bond investment yields.
GuideWell has a mature and comprehensive ERM program that has been operational for over a decade and includes the operations of FCL. ERM is embedded in the corporate culture through strong and effective governance. Standard processes and tools support risk management across the organization.
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