Best’s News & Research Service - November 01, 2018 02:39 PM (EDT)
A.M. Best Upgrades Issuer Credit Ratings of Liberty Bankers Life Insurance Company and Its Subsidiaries
- November 01, 2018 02:39 PM (EDT)
Oldwick //BestWire// - A.M. Best has upgraded the Long-Term Issuer Credit Ratings (Long-Term ICRs) to “bbb+” from “bbb” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Liberty Bankers Life Insurance Company (Oklahoma City, OK), and its wholly owned life insurance subsidiaries, The Capitol Life Insurance Company (Dallas, TX) and American Benefit Life Insurance Company (Oklahoma City, OK), together known as the Liberty Bankers Group. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Liberty Bankers Group’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).
The Long-Term ICR upgrade reflects the recent debt to equity conversion of $146 million at the holding company level, HGH Group, Inc. Furthermore, the group benefits from very strong Best’s Capital Adequacy Ratio scores and adequate reserves. Partially offsetting these strengths is an elevated exposure to NAIC 2 bonds as compared with life/annuity industry totals, in addition to high exposure to real estate and mortgage loans. The group does have a long-term track record of managing these asset classes.
With respect to the operating performance, return on equity is in the mid-single digits and direct life insurance premiums have increased over the last four years. Although moderate acquisition activity, along with increasing life insurance sales, have been causing strain, overall net income has been positive over the last five years.
The group has shown an ability to grow organically, through new lines of business and through acquisitions. It offers products that are generally deemed low risk and works with a large number of independent agents.
ERM has been gaining greater attention within the group, as the new chief risk officer has implemented new risk controls across the group. At the same time, the group’s modeling capabilities and integration of multiple segments are still emerging.
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.
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