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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 15, 2013 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and issuer credit rating (ICR) to “a-” from “bbb+” of National Teachers Associates Life Insurance Company (NTA Life) (Addison, TX). NTA Life is a privately held company owned by Ellard Enterprises, Inc. The outlook for both ratings has been revised to stable from positive.
Additionally, A.M. Best has assigned an FSR of A- (Excellent) and an ICR of “a-” to NTA Life’s subsidiary, NTA Life Insurance Company of New York (NTA Life of NY) (New York, NY). The outlook assigned to both ratings is stable.
The rating actions reflect NTA Life’s progress over the last few years in significantly growing premium revenue and earnings from its supplemental health products, primarily disability, hospital indemnity and cancer products, as well as expanding sales beyond its historical core marketing areas, including life products. In mid-2013, NTA Life incorporated NTA Life of NY—with a similar operating profile—as its marketing arm in New York. NTA Life of NY has received the explicit support of its parent via its name branding, an initial capital infusion of $7 million and a written guarantee—which is in the process of being implemented—as well as reinsurance support and other planned strategic initiatives.
A.M. Best believes NTA Life has demonstrated favorable trends in its overall premium expansion, earnings and risk-adjusted capital relative to its current rating level and peers. Additionally, the company has enhanced its balance sheet strength by reducing its exposure to return of premium business as well as working towards improving its overall business profile diversity and investment management.
NTA Life markets supplemental limited benefit medical products, primarily to teachers, state government employees and other market niches such as emergency services personnel, and more recently, union/labor groups. Although the company’s business is becoming more geographically diversified, three-fifths of its premium revenue is concentrated in California, Texas, Virginia and the Carolinas. Moreover, consistent with the life/health industry in general, NTA Life will be challenged to maintain healthy yields in the current low interest rate environment.
Given the recent movement in NTA Life’s ratings, A.M. Best believes the company is well positioned at its current rating level for the near term. Negative rating actions could occur if trends in NTA Life’s premium revenue and/or earnings begin to wane or risk-adjusted capital significantly deteriorates.
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.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.