AM Best Revises Outlooks to Stable for Universal Insurance Company; Affirms Credit Ratings of Universal Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of Universal Insurance Company (UIC). At the same time, AM Best has affirmed the FSR of B (Fair) and the Long-Term ICR of “bb+” (Fair) of Universal Life Insurance Company (ULICO). The outlook of ULICO’s Credit Ratings (ratings) is stable. Both companies are domiciled in Guaynabo, PR.

The ratings of UIC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).

The ratings also reflect UIC’s balance sheet strength, which is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), generally stable loss reserving trends, a conservative investment portfolio, solid liquidity and strong surplus growth. However, surplus growth has been tempered by dividend payments. Furthermore, AM Best remains concerned regarding the potential impact of ULICO’s valuation and monetization of assets held in trust at the ultimate parent, Universal Group, Inc., which is the main driver of the revision of the outlook on UIC’s ratings to stable from positive.

Operating performance metrics over the most recent five-year period remained solid, supported by favorable underwriting income and solid investment returns. The adequate assessment is supported further by a five-year average combined ratio of 91%, and 92% through the first half of 2026, driven by a prudent underwriting strategy.

The neutral business profile assessment is reflective of UIC’s position as a market leader in personal and commercial lines in Puerto Rico with moderate product diversification but limited geographic diversification. ERM is assessed as marginal driven by reinsurance counterparty risk at the subsidiary life insurance company.

The ratings of ULICO reflect its balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and marginal ERM.

The outlook on ULICO’s ratings remains stable, although AM Best continues to have concerns over the valuation and monetization of assets held in trust for ULICO’s benefit. The company’s business profile is assessed as limited with its concentrated business model that is focused on providing annuities in the Puerto Rico market.

ULICO continues to take steps to reduce its overall counterparty risk and its legal actions to recapture the trust assets that are backing reserve credits related to Private Bankers Life & Annuity (PBLA). Exposure to the closed block of PBLA liabilities has decreased and ULICO recently monetized an $87 million trust asset. Significant assets as a percentage of its overall capital position remain; AM Best will continue to monitor such efforts as the company proceeds. The sizable outstanding trust assets and the execution risk associated with monetizing the remaining amount are the main drivers of the marginal ERM assessment for UIC and ULICO.

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.

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.

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