AM Best Information Services

AUGUST 29, 2014 02:30 PM (EDT)

A.M. Best Upgrades Issuer Credit Rating of Bankers Life Insurance Company

Steven Faulks-L/H
Senior Financial Analyst
(908) 439-2200, ext. 5035

Adib Nassery-P/C
Financial Analyst
(908) 439-2200, ext. 5687

Christopher Sharkey
Manager, Public Relations
(908) 439-2200. ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - AUGUST 29, 2014 02:30 PM (EDT)
A.M. Best has upgraded the issuer credit rating (ICR) to "bb+" from "bb" and affirmed the financial strength rating (FSR) of B (Fair) of Bankers Life Insurance Company (Bankers Life) (St. Petersburg, FL).

Concurrently, A.M. Best has affirmed the FSR of B+ (Good) and ICRs of "bbb-' of Bankers Insurance Company (Bankers) (St. Petersburg, FL) and its property/casualty subsidiaries, Bankers Specialty Insurance Company (Metarie, LA) and First Community Insurance Company (St. Petersburg, FL). The outlook for all ratings is stable.

The ICR upgrade reflects A.M. Best's improved view of the overall strategic importance of Bankers Life to Bankers. The ratings also reflect its adequate level of risk-adjusted capitalization, generally positive, though fluctuating operating performance and improved credit quality of its fixed income portfolio. Bankers Life operates as the sole life insurance member for Bankers, contributing measurable levels of earnings and premium revenue to the group. Bankers Life also maintains effective asset liability management to mitigate significant mismatch or duration risk.

Offsetting factors include challenges in executing its strategic business plans, maintenance of adequate capitalization levels as it manages its expected growth in interest-sensitive liabilities and ability to maintain improved operating results. Bankers Life has used significant levels of reinsurance to manage capital and business strain related to its fixed-annuity business. With plans to retain all new business going forward, Bankers Life may have difficulty improving upon its historical operating performance, noting the statutory loss recorded through the first six months of 2014. Absolute capital levels are also relatively modest and lower in 2014, reflecting dividends and the repayment of an internal surplus note.

Factors that could lead to a positive rating action include a sustained improvement in risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio, net operating performance trends that meet or exceed A.M. Best's expectations or a positive rating action on Bankers. Factors that could cause downward rating pressure include a meaningful and sustained decline in risk-adjusted capitalization, higher than expected dividend payments made to Bankers, net operating trends that fall below A.M. Best's expectations or a downgrade of Banker's ratings.

The ratings and outlook for the property/casualty operations reflect adequate risk-adjusted capitalization, generally favorable loss experience as a result of extensive exposure management, as well as other profitability initiatives adopted by management in recent years. Partially offsetting these positive factors are the continuance of an elevated underwriting expense ratio and the challenges stemming from rapid new business growth, which could place pressure on capitalization and contribute to elevated underwriting ratios. In addition, the group's narrow geographic concentration exposes it to severe weather-related events.

Factors that could lead to positive rating action at the property/casualty operations include a sustainable profitable trend in operating performance, as well as improvement in risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio. Conversely, any deterioration in operating performance and erosion in the capital base and risk-adjusted capitalization could result in negative rating pressure.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at

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