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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 14, 2016 10:56 AM (EST)
A.M. Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of “aa-” of Mutual of Omaha Insurance Company and its subsidiaries, United of Omaha Life Insurance Company, Companion Life Insurance Company (Hauppauge, NY) and United World Life Insurance Company. Concurrently, A.M. Best has affirmed the Long-Term Issue Ratings (Long-Term IR) of “a” on the group’s existing surplus notes. The outlook of these Credit Ratings (ratings) is stable. The companies (collectively referred to as Mutual of Omaha) are located in Omaha, NE, unless otherwise specified.
The rating affirmations reflect Mutual of Omaha’s favorable reputation in its core Medicare supplement insurance market, as well as the company’s growing presence in its Group Benefits segment, its diversified distribution platforms and the organization’s strong risk-adjusted capitalization. In recent periods, Mutual of Omaha has reported good GAAP operating results, reflecting favorable revenue growth in core lines of business within its individual and group benefits segments. Additionally, Mutual of Omaha Bank continues to contribute meaningfully to operating results. A.M. Best believes that the company’s product suite, distribution network and partnerships are becoming increasingly diverse, and lend themselves to the company’s favorable profile.
A.M. Best notes that Mutual of Omaha’s core Medicare supplement insurance represents in excess of 40 % of GAAP individual and group benefits revenues through Sept. 30, 2016. As a result, the company is exposed to material regulatory and market-related risks associated with this line of business. While GAAP results generally have been favorable, A.M. Best notes that on a statutory basis, the company’s operating earnings have been impacted negatively by statutory reserve strain within the ordinary life line of business, driven by new sales of those products. As with some of Mutual of Omaha’s peer companies, unfavorable mortality also has impacted negatively the results of the life and annuity business lines.
Mutual of Omaha’s absolute and risk-adjusted capitalization is considered to be more than adequate for its current level of insurance and investment-related risks on a consolidated and individual operating entity basis. Consistent with some industry peers, Mutual of Omaha utilizes an arbitrage strategy to supplement earnings and parental guarantee for funding of redundant statutory reserves on certain term and universal life coverages. A.M. Best believes the company’s operating and financial leverage are manageable; however, it is monitoring closely funding and levels of reserves should leverage increase materially going forward. A.M. Best currently views parental guarantees as the least creditworthy form of AG 48 funding solutions.
The following Long-Term IRs have been affirmed with a stable outlook:
Mutual of Omaha Insurance Company—
— “a” on $300 million 4.297% surplus notes, due 2054
— “a” on $300 million 6.95% surplus notes, due 2040
— “a” on $300 million 6.80% surplus notes, due 2036
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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.
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