OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of United Heritage Life Insurance Company (UHLIC) (Meridian, ID). Concurrently, AM Best has revised the outlooks to positive from stable and affirmed the FSR of B+ (Good) and the Long-Term ICR of “bbb-” of United Heritage Property & Casualty Company (UHPC) (Meridian, ID). AM Best also has revised the outlook to positive from stable for the Long-Term ICR and affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb” of Sublimity Insurance Company (SIC) (Sublimity, OR). The outlook of the FSR is stable. These companies are operating subsidiaries of United Heritage Financial Group, Inc.
The positive outlooks reflect substantial improvements made to the organization’s enterprise risk management (ERM) program in recent years. These enhancements include expanded catastrophe modeling, de-risking of the property/casualty portfolios in order to reduce concentration risk and a significant restructuring of the reinsurance program to better protect against catastrophe events.
The Credit Ratings (ratings) for UHLIC reflect the company’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and marginal ERM. UHLIC maintains the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and high risk-based capital (RBC) offset by an investment portfolio with above-average allocations to below investment grade bonds that have generated above-industry returns. In terms of operating performance, the company has reported net income in each of the last five years and return on equity measures are consistently favorable.
The ratings for UHPC reflect the company’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and marginal ERM. In terms of balance sheet strength, UHPC maintains the strongest level of risk-adjusted capitalization, as measured by BCAR, and the company has experienced generally favorable loss reserve development since 2010. Offsetting this factor is a volatile level of surplus, albeit declining, in the last five years and elevated leverage measures. UHPC’s operating results have been volatile, with the company alternating between profitable and unprofitable income and return measures in the last five years. In terms of business profile, UHPC’s business profile is considered limited, as it is largely concentrated in the homeowners’ and auto lines with premium written in Idaho, Utah, Oregon and Arizona.
The ratings of SIC reflect the company’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and marginal ERM. SIC maintains the strongest level of risk-adjusted capitalization, as measured by BCAR, and significant surplus growth in the last five years. Offsetting this factor is a high dependence on reinsurance, as demonstrated by elevated ceded leverage, as well as mixed loss reserve development in recent years. In terms of operating performance, SIC’s five-year combined ratio and five-year return on revenue measures are in line with the private passenger standard auto and homeowners’ composite. SIC’s business profile assessment reflects its concentration in the auto and homeowners’ lines and premium written in three states: Oregon, Utah, and Idaho.
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