OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” from “a-” of the insurance subsidiaries of American Enterprise Group, Inc. (AEG). The subsidiaries are American Republic Insurance Company, American Republic Corp Insurance Company, Medico Corp Life Insurance Company, Medico Insurance Company, Medico Life and Health Insurance Company and Great Western Insurance Company (GWIC). All companies are domiciled in Des Moines, IA. The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect AEG’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating upgrades reflect a continued strengthening in the group’s balance sheet strength metrics, including maintenance of risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Balance sheet strength is supported by a high-quality investment portfolio with solid liquidity ratios. The group’s balance sheet previously had been impacted by unfavorable balance sheet factors, including reserve charges and an elevated allocation to higher risk assets from its 2018 acquisition of GWIC. However, AEG has successfully integrated the management of GWIC’s investment portfolio and balance sheet over the last few years since the acquisition and has lowered some of the higher risk asset exposure. With the addition of GWIC’s life insurance business, there has been an increased focus by the organization on reserves and asset-liability matching for all lines of business.
Furthermore, AEG’s core health business continues to produce favorable operating results, which contribute to overall capital growth through retained earnings. AEG has reported a trend of overall favorable operating performance over the past four years despite challenges related to high competition and the persistent low interest rate environment. In addition, the organization’s ERM program and risk management capabilities are considered appropriate for the risk profile of the organization. The ERM framework is further supported by its governance structure and quantifiable risk appetite and tolerance metrics, as well as by stress testing performed on top risks.
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