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Best’s News & Research Service - November 19, 2014 10:29 AM (EST)

A.M. Best Upgrades Ratings of Citizens Security Life Insurance Company

  • November 19, 2014 10:29 AM (EST)

Oldwick //BestWire// - A.M. Best has upgraded the financial strength rating to B+ (Good) from B (Fair) and the issuer credit rating to "bbb-" from "bb+" of Citizens Security Life Insurance Company (Citizens Security) (Louisville, KY). The outlook for both ratings is stable.

The ratings reflect Citizens Security's favorable risk-adjusted capital position, as well as continuing positive operating results and diversified premium revenue growth in its core individual accident and health segment, with an emphasis on its dental and vision business. Additionally, its parent holding company, Citizens Financial Corporation, significantly reduced its debt in recent years and anticipates eliminating this debt by year-end 2015. Given that Citizens Security has been servicing the debt payments, the reduction in future dividends is expected to enable Citizens Security to more appreciably grow its capital.

A.M. Best believes Citizen Security's core individual dental and vision segment needs to increasingly contribute to future earnings, as net income from the amortization of a ceding commission on reinsured individual life business continues to comprise a sizable portion of its earnings. Additionally, Citizens Security continues to maintain an elevated level of higher risk assets, including equities, real estate and below investment grade securities. However, the company recently sold a parcel of land held as real estate and anticipates a significant reduction in below investment grade securities when two material securities mature in mid-to-late 2015.

Upward rating movement is unlikely in the near-to-medium term given Citizens Security's recent upgrade. Rating drivers that may result in future negative rating actions include a material decline in the company's operating performance, deterioration in its premium revenue, unfavorable investment results and/or erosion of its risk-adjusted capital.

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 www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:


  • A.M. Best's Liquidity Model for U.S. Life Insurers

  • Risk Management and the Rating Process for Insurance Companies

  • Understanding BCAR for U.S. and Canadian Life/Health Insurers


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



Kentucky United States Financial Strength Life Insurers Press Release Insurance Issuer Credit Rating Best's Credit Rating Action


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