CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 27, 2010 12:00 AM (EDT)
A.M. Best Co. has upgraded the issuer credit rating (ICR) to "bbb+" from "bbb" and affirmed the financial strength rating (FSR) of B++ (Good) of Central States Health & Life Co. of Omaha (CSO) (Omaha, NE). The outlook for the ICR has been revised to stable from positive, and the outlook for the FSR is stable.
The upgrade of CSO's ICR reflects its favorable level of risk-adjusted capitalization, positive operating earnings and proven strategy to gain market share in the credit insurance marketplace. Since 2006, CSO has executed upon a strategy to aggressively obtain market share in the credit insurance marketplace primarily through core alliances. Additionally, the company has developed and executed a complimentary debt protection program to further strengthen its business profile.
The company reported a statutory gain in 2009 and has reported positive operating earnings over a five-year period. Moreover, CSO's investment portfolio has remained somewhat insulated from the economic and investment crisis, with modest impairments and investment losses relative to a strong risk-adjusted capital base.
While CSO's capitalization and earnings remain favorable, A.M. Best believes its business profile may remain challenged. The company is subject to macroeconomic and competitive pressures, which include competition from property and casualty products (i.e., vehicle service contracts and guaranteed auto protection) that compete with credit insurance products in the automobile dealership channel.
The ICR has been upgraded to "bbb+" from "bbb" and the FSR affirmed at B++ (Good) for the following wholly owned subsidiaries of Central States Health & Life Co. of Omaha:
-Censtat Life Assurance Company
-Southeast Family Life Insurance Company
The ratings of both companies reflect the integration into CSO's strategic plan and operations as they function as reinsurers for the parent. The ratings also are based on the favorable capitalization levels and positive operating earnings for both companies.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology .
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.