AM Best

A.M. Best Affirms Ratings of Oxford Life Insurance Company and Subsidiaries


Steve Vincent
Senior Financial Analyst
+1 908 439 2200, ext. 5802

Rosemarie Mirabella
Assistant Vice President
+1 908 439 2200, ext. 5892

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
+1 908 439 2200, ext. 5644


OLDWICK - MAY 26, 2016 01:55 PM (EDT)
A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit ratings (ICR) of “a-” of Oxford Life Insurance Company (Oxford Life) (Phoenix, AZ) and its subsidiary, Christian Fidelity Life Insurance Company (Christian Fidelity) (Dallas, TX). A.M. Best has also affirmed the FSR of B++ (Good) and the ICR of “bbb” of North American Insurance Company (Madison, WI). The outlook for each rating is stable. These companies are owned by the ultimate parent, AMERCO [NASDAQ: UHAL], which also is the parent of U-Haul International, Inc., North America’s leading “do-it-yourself” household moving and self-storage operator.

The rating affirmations reflect a focused business strategy serving senior markets, positive consolidated operating results, diversified lines of business and continued strong risk-adjusted capitalization. The group has concentrated on revenue and earnings diversification by providing products to the senior market, organically and through reinsurance activities. Organic growth has been driven by strong sales of Medicare supplement and final expense insurance, as well as opportunistic growth in fixed-annuity products. Most recently, the continued stabilization of competitive rates and entry into new states has driven growth within the Medicare supplement business. A.M. Best also notes that the companies’ statutory and GAAP earnings have improved through price increases in the Medicare supplement business and higher spreads on new annuity products, while retained earnings have led to strong risk-adjusted capitalization.

Partially offsetting these positive rating factors are the intense competition within Oxford Life’s senior market niche, regulatory challenges, the level of interest-sensitive reserves and persistent low interest rates. A.M. Best notes the challenges in sustaining earnings momentum, as intense competition could place pressure on organic life premium growth, and the regulatory hurdles for its Medicare supplement line that remain a potential impediment. Although the Medicare supplement line is still the group’s core contributor to profitability, their other lines of business, such as final expense and fixed annuities, could reduce the group’s statutory results because of new business strain. In addition, with an increased exposure to fixed annuities, A.M. Best believes that Oxford Life may encounter spread compression because of the ongoing low interest rate environment.

Key factors that could result in a positive rating action include significant and profitable growth within ordinary life insurance. Key factors that could result in a negative rating action include a material deterioration in AMERCO’s balance sheet and operating results, increased product concentration risks or higher growth in less creditworthy products.

This press release relates to rating(s) 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.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.

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