Best’s News & Research Service - March 30, 2017 01:27 PM (EDT)
A.M. Best Affirms Credit Ratings of American Enterprise Group’s Subs.; Assigns Credit Ratings to Medico Life and Health Ins. Co.
- March 30, 2017 01:27 PM (EDT)
Oldwick //BestWire// - A.M. Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of American Republic Insurance Company (American Republic) (Des Moines, IA), its subsidiaries, American Republic Corp Insurance Company (Des Moines, IA), and Medico Corp Life Insurance Company (Des Moines, IA), and its sister company, Medico Insurance Company (Des Moines, IA). American Republic and Medico Insurance Company are direct subsidiaries of American Enterprise Group, Inc. (American Enterprise), which is an intermediate holding company in the organization’s mutual holding company structure. The outlook of these Credit Ratings (ratings) is stable. Concurrently, A.M. Best has assigned an FSR of A- (Excellent) and a Long-Term ICR of “a-” to Medico Life and Health Insurance Company (MLHIC) (Des Moines, IA), a subsidiary of American Enterprise. The outlook assigned to these Credit Ratings (ratings) is stable.
American Enterprise’s rating affirmations reflect the organization’s strong balance sheet that includes its more-than-adequate risk-adjusted capital position and its well-managed investment portfolio. The company’s statutory operating profitability has benefited from American Enterprise’s growth in net premiums written over the past few years and has been bolstered by a steady stream of net investment income. However, A.M. Best notes that profitability has been dampened by strain related to commissions and other expenses in recent years. As of Dec. 31, 2016, the company reported favorable revenue growth with its core Medicare supplement business representing roughly 60% of new sales. A.M. Best would like to see the organization achieve further business diversification while maintaining its favorable level of risk-adjusted capital and notes that the market for Medicare supplement remains very competitive and subject to potential regulatory pressures.
The ratings of MLHIC reflect its strategic importance to the American Enterprise organization as a writer of Medicare supplement coverage. All of MLHIC’s business is ceded to its sister company, American Republic. The organization as a whole continues to expand its distribution through its career and independent agents, as well as its strategic partnerships within the health insurance marketplace. Additionally, American Enterprise continues to focus on diversification of its product mix, offering a new suite of dental products along with supplemental health products and final expense insurance.
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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