AM Best Revises Outlooks to Stable and Affirms Credit Ratings of Illinois Mutual Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Illinois Mutual Life Insurance Company (Illinois Mutual) (Peoria, IL).

The Credit Ratings (ratings) reflect Illinois Mutual’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The revision of the outlooks to stable from negative reflects Illinois Mutual’s favorable earnings experience in 2021, which continued into 2022. The company’s earnings rebounded strongly in 2021 after a small loss in 2020, driven by increased investment income, a reduction in benefit expenses, and reserve releases. The increase in investment income was driven by strong performance from the company’s Schedule BA assets and commercial mortgages. The reserve releases were due primarily to increased surrender activity and deaths within the annuity and disability segments, paired with fewer disability claims. The company’s disability segment has performed well in recent years and drives most of the earnings. Despite the favorable bottom-line results, the company has struggled to achieve meaningful premium growth in recent years; however, premium has fluctuated in a narrow range since 2012. The company has been focused on system enhancements, which has allowed them to introduce new products quickly, launching a simplified-issue whole life product in 2022. Even with new business strain and system enhancements in recent years, the company has remained profitable. AM Best believes that the rising interest rate environment should benefit the company, as its legacy products, universal life and individual annuities have relatively high guaranteed rates.

The ratings also reflect Illinois Mutual’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), in support of its insurance and investment risks due to a conservative investment portfolio and the use of reinsurance. Also, the company continues to enhance its distribution, through recruiting new agents and improving time-to-market of new products. AM Best notes that the core ordinary life and disability income product lines do not expose the company to significant levels of product risk.

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