Press Release - NOVEMBER 01, 2019
AM Best Removes From Under Review and Affirms Credit Ratings of LifeShield National Insurance Co. and Individual Assurance Co.
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 01, 2019
The rating actions follow the completion of LifeShield’s acquisition of IAC, as well as AM Best’s ongoing discussions with management regarding the capital positions and projected operating performance of both entities in the near term.
The ratings of LifeShield National reflect its balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM). The acquisition of IAC was funded with cash, reducing the company’s levels of excess capital as a result. The strong balance sheet assessment reflects LifeShield National’s post-acquisition capital position, expected future capital growth from continued earnings and improved credit quality within its fixed income portfolio. Operating performance trends are modest and include improved top-line growth in sales of individual life insurance and short-term medical products and increasing after-tax income in each of the last five years. The company competes in highly competitive life and health insurance markets and lacks the scale of larger competitors in those markets. Most of the earnings are generated from its health products. LifeShield National’s ERM is appropriate for its size and risk profile. With the acquisition now closed, AM Best will continue to monitor the integration of IAC with Lifeshield.
The ratings of IAC reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, limited business profile and marginal ERM. IAC’s balance sheet strength is adequate with sufficient levels of post-acquisition risk-adjusted capital, while the company’s financial flexibility is limited. Operating performance also is adequate, reflecting top-line growth, good returns on equity and trends of positive and generally increasing after-tax earnings. Similar to LifeShield National, IAC operates in highly competitive health insurance markets. However, IAC’s business profile is limited, given its geographic and product concentration, with business in three states and a product mix that is made up mainly of Medicare supplement products. IAC’s ERM is reflective of its lack of a formal framework and elevated concentration risk.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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