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 Lumico Life Insurance Company (Jefferson City, MO) and Lumico Life Insurance Company of New York (Armonk, NY). The outlook of these Credit Ratings (ratings) is stable. Together, these two companies are referred to as Lumico Life, and are indirect subsidiaries of Swiss Re Ltd (Swiss Re).
Lumico Life Insurance Company was acquired through Swiss Re’s new iptiQ Americas Inc. unit at the end of 2016. Lumico Life Insurance Company of New York was established and licensed in December 2018.
The ratings reflect Lumico Life’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and very strong enterprise risk management, as a member of the Swiss Re group. The ratings also receive lift from Lumico Life’s ultimate parent company, Swiss Re. AM Best expects the Swiss Re group to continue to provide reinsurance and capital support to Lumico Life when and if required due to its important role in the Swiss Re group’s long-term plans to grow its direct individual life/health (L/H) insurance business in the United States.
Lumico Life’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), continues to be assessed at the strongest level as of year-end 2019, benefiting from its relatively conservative short-term investment portfolio and from very strong internal reinsurance support provided by the Swiss Re group, although the absolute level of capital remains modest. A capital contribution was made in 2019 to further support the additional higher tax liability and investment in underwriting, but there are no formal financial guarantees extended to Lumico Life from Swiss Re.
Protection products are expected to drive premium growth, with the primary initial focus on simplified level term life insurance and Medicare supplement products, sold by a variety of distribution partners leveraging different sales channels. The company continues to build reserves and align appropriate assets to cover its liabilities. The company maintains a limited market position as it continues to grow, and has not yet reached the break-even point in terms of earnings. Lumico Life is expected to grow profitably in the near future and become self-sufficient from a capital perspective.
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