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Best’s News & Research Service - May 20, 2021 01:06 PM (EDT)

AM Best Downgrades Credit Ratings of Upstream Life Insurance Company; Places Ratings Under Review With Negative Implications

  • May 20, 2021 01:06 PM (EDT)

Oldwick //BestWire// - AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “bbb+” (Good) of Upstream Life Insurance Company (Upstream) (Dallas, TX). Concurrently, AM Best has placed the Credit Ratings (ratings) under review with negative implications.

The ratings reflect Upstream’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

The rating downgrades reflect a revision to Upstream’s balance sheet assessment to adequate from very strong, as well as a revision to its ERM capabilities to marginal from appropriate. These actions follow a significant decline in risk-adjusted capitalization that occurred at year-end 2020 and a further decline reported in the first quarter of 2021. These declines were driven largely by a number of highly concentrated assets on the balance sheet that exceeded the Texas Department of Insurance’s issuer limitations and two unrated securities, both of which contributed to a large amount of non-admitted assets. Subsequent to the end of first-quarter 2021, a significant portion of assets have been sold, which indicates that capital will be down marginally from year-end 2020. These actions led to AM Best’s revised assessment of Upstream’s ERM capabilities.

The under review with negative implications status reflects continued uncertainty regarding future risk-adjusted capitalization levels and the resolution of remaining non-admitted assets, along with monetization of receivables related to significant asset sales in the second quarter of 2021. AM Best will continue to monitor the company’s recapitalization efforts, which may include reinsurance as well as an internal revisions to its corporate structure, which will increase reported capital.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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