AM Best Downgrades Credit Ratings of Unified Life Insurance Company; Maintains Under Review With Negative Implications Status

OLDWICK, N.J.--()--AM Best has downgraded the Financial Strength Rating (FSR) to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb-” (Good) from “bbb+” (Good) of Unified Life Insurance Company (Unified Life) (headquartered in Overland Park, KS). Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings).

The ratings reflect Unified Life’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

The ratings downgrade is attributed to a deterioration in United Life’s risk-adjusted capitalization from a very strong level in 2019 to a strong level in 2020, as measured by Best’s Capital Adequacy Ratio (BCAR). The lower BCAR assessment was driven by a significant increase in net premium in 2020 from sales of its now discontinued hospital indemnity wellness product that added surplus strain, as well as an increase in higher risk investments, which resulted in a higher capital requirement. Furthermore, both risk-adjusted capitalization and Unified Life’s absolute capital and surplus deteriorated in the first quarter of 2021, driven by the recording of a reserve for a litigation settlement related to its now discontinued short-term health product.

The ratings downgrade is also attributed to AM Best’s revised assessment of Unified Life’s ERM. In recent years, unanticipated regulatory, market and operational risks have negatively impacted the company’s balance sheet strength from its formerly marketed short-term health, Medicare Supplement and hospital indemnity wellness products. Each of these product endeavors resulted in the company withdrawing from the respective product market.

The ratings will remain under review pending AM Best's further discussions with management regarding Unified Life's plan to improve the company's capital position in the near term.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Wayne Kaminski
Senior Financial Analyst
+1 908 439 2200, ext. 5061
wayne.kaminski@ambest.com

Brian Virostek
Financial Analyst
+1 908 439 2200, ext. 5531
brian.virostek@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

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Contacts

Wayne Kaminski
Senior Financial Analyst
+1 908 439 2200, ext. 5061
wayne.kaminski@ambest.com

Brian Virostek
Financial Analyst
+1 908 439 2200, ext. 5531
brian.virostek@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com