AM Best Assigns Credit Ratings to Heartland National Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” (Good) to Heartland National Life Insurance Company (HNL) (Indianapolis, IN). The outlook assigned to these Credit Ratings (ratings) is stable.

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

The ratings reflect HNL’s positive premium growth and earnings trend, and a strong overall balance sheet strength assessment. HNL’s risk-adjusted capitalization is assessed at the strongest level in 2021 as measured by Best's Capital Adequacy Ratio (BCAR); however, BCAR is projected to decline to an assessed level of strong in the near term driven by significant growth in hospital indemnity sales. HNL’s net premium levels have increased significantly over the previous several years, driven primarily by a relaunched hospital indemnity plan called Secure Advantage Flex that provides daily cash benefits for hospitalization should certain policy conditions be met, in addition to offering several optional riders. The bottom-line performance is projected to be positive yet challenged, primarily attributed to aggressive sales targets for the hospital indemnity product. This trend may persist until the targeted renewal premiums help offset new business strain.

The company has access to capital through its principal owner, who has demonstrated an ability to infuse capital contributions to support business growth as needed, and the company uses extensive reinsurance to share risk and manage capital strain. Additionally, the company has a limited business profile because the majority of new business premiums are concentrated in the hospital indemnity product. The company has expanded nationally to provide some regional diversity, and management has plans to develop a more diversified product portfolio offering; however, the high degree of competition in the supplemental health marketplace is also a headwind toward execution of the company’s business plan.

The stable outlooks reflect AM Best’s expectation that over the intermediate term, the company will maintain a strong balance sheet strength assessment, supported by additional initiatives that will develop and formalize the company’s ERM framework further. At present, HNL’s ERM framework is evolving. The company has elements of formal ERM processes that are carried out by an experienced leadership team that identifies, assesses and manages risks, including annual sensitivity testing and quarterly loss ratio monitoring. AM Best will continue to monitor HNL’s progress in strengthening its risk management capabilities and governance.

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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