AM Best Affirms Credit Ratings of Lumico Life Insurance Company and Its Affiliates

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+” (Excellent) of Lumico Life Insurance Company (Jefferson City, MO) and Lumico Life Insurance Company of New York (Armonk, NY). Together, these two companies are referred to as Lumico Life, and are indirect subsidiaries of Swiss Re Ltd (Swiss Re). AM Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Elips Life Insurance Company (elipsLife) (headquartered in Schaumburg, IL). elipsLife is an indirect subsidiary of Swiss Re. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Lumico Life’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and very strong enterprise risk management, as the overall risk management program through Swiss Re is being leveraged throughout the whole organization. Furthermore, Lumico Life receives rating lift as it benefits from explicit parental support and is likely to receive future support, if needed, to grow operations. AM Best expects the group to continue to maintain its strategic importance to its parent in a supporting role of providing direct life insurance operations and receive rating enhancement.

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 2020, benefiting from its relatively conservative short-term investment portfolio for immediate liquidity needs and from very strong internal reinsurance support provided by Swiss Re, although the absolute level of capital remains modest. There are no formal financial guarantees extended to Lumico Life from Swiss Re, but the ultimate parent has made previous capital infusions into the company to support increased expenses and underwriting enhancements.

AM Best expects a mix of protection and health products to drive Lumico Life’s premium growth going forward, with the primary initial focus on simplified level term life insurance and Medicare supplement products, which are 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. Overall product design and pricing stands will continue to benefit from Swiss Re’s extensive data and underwriting expertise. Lumico Life maintains a limited market position as it continues to grow, and has not yet reached the breakeven point in terms of earnings, but is expected to do so in the near future with revised projections.

The ratings of elipsLife reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and very strong enterprise risk management, as the overall risk management program through Swiss Re is being leveraged throughout the whole organization. Furthermore, elipsLife’s receives rating lift as it benefits from explicit parental support and is likely to receive future support, if needed, to grow operations. AM Best expects the group to continue to maintain its strategic importance to its parent in a supporting role of providing direct Medicare supplemental insurance while receiving rating enhancement.

Swiss Re implemented a change in strategy for elipsLife, placing its group life and health business into runoff as of the end of 2020. elipsLife has been integrated into the iptiQAmericas Inc. business model, eventually becoming a key player that will support the growth strategy. AM Best expects elipsLife to continue to benefit from a significant reinsurance agreement with Swiss Re. Another capital infusion was made by Swiss Re in 2021 to further support elipsLife’s business runoff costs and volatile market conditions.

Despite its limited business profile, elipsLife’s ratings reflect AM Best’s expectation that the company will execute on its business plan to become the primary writer of Medicare supplement insurance in support of Lumico Life’s retail initiative, while continuing to benefit from Swiss Re’s support. AM Best will continue to monitor elipsLife’s progress closely in the near future to ensure that targeted results are realized.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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