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Best’s News & Research Service - January 19, 2018 03:51 PM (EST)

A.M. Best Affirms Credit Ratings of Mutual of Omaha Insurance Company and Its Subsidiaries

  • January 19, 2018 03:51 PM (EST)

Oldwick //BestWire// - 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 Credit 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 ratings reflect Mutual of Omaha’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management. Mutual of Omaha’s absolute and risk-adjusted capitalization historically has been supportive of its insurance and investment-related risks on a consolidated and individual operating entity basis. A.M. Best believes the company’s operating and financial leverage are manageable and notes that the company recently executed on an excess of loss reinsurance agreement with a highly rated third party for the support of its AG48 reserves, replacing its prior parental guarantee of these liabilities. While the company typically has maintained a relatively lower risk investment allocation, total real estate related assets are somewhat higher than industry peers. However, A.M. Best notes that the company has not reported sizable or unanticipated realized capital losses in recent years.

The company’s favorable business profile is anchored by its diversification of products, as well as distribution channels. As such, the overall operating profitability, both on a statutory and GAAP basis, has improved generally over the past 12-month period. Mutual of Omaha’s operating results have been bolstered by its core Medicare supplement business, which has benefited from a lower loss ratio during 2017. Additionally, operating results reflected favorable growth within its Workplace Solutions segment, specifically with improved long-term disability claims and case management metrics. Results within the company’s Income and Wealth Solutions segment continue to be somewhat challenged with volatility due to one-time charges and life unlocking in recent quarters, as well as continued statutory strain associated with certain lines of business. A.M. Best believes that the Mutual of Omaha Bank continues to provide a steady stream of earnings, as well as other synergies to the company’s operations, lending to the company’s favorable business profile.

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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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

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