AM Best Upgrades Issuer Credit Rating of Unity Financial Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “bbb” (Good) and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Unity Financial Life Insurance Company (Unity) (Cincinnati, OH). In addition, AM Best has revised the outlook of the Long-Term ICR to stable from positive. The outlook of the FSR is stable.

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

The Long-Term ICR upgrade reflects a general improvement of Unity’s balance sheet strength. Growth in capital had been constrained due to the need to service debt at the holding company level in recent years; however, only modest dividends are anticipated in the medium term. Additionally, the reinsurance treaty that supported Unity’s single premium immediate annuity (SPIA) sales was terminated in 2023, which has allowed the company to retain its profitable business. These factors have contributed to stronger surplus growth, which has driven an improvement in risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio (BCAR), to the very strong level. Balance sheet strength is expected to further improve as reinsurance leverage declines due to the runoff of old blocks of business. Unity also maintains a conservative investment portfolio that is largely concentrated in investment-grade fixed income securities. As a result, the balance sheet strength assessment has been revised to strong from adequate.

Partially offsetting these positive rating factors is growing concentration in annuities and increasing operating leverage. Declining life sales, combined with strong annuity sales, is causing the product mix to become more concentrated, while growing spread-investment activities are leading to higher levels of operating leverage. AM Best will continue to monitor these issues for any potential impact to Unity’s ratings.

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