AM Best Information Services

MAY 31, 2011 12:00 AM (EDT)

A.M. Best Revises Outlooks of United Heritage Life Insurance Company and Sublimity Insurance Company

Jason Hopper
Financial Analyst—L/H
(908) 439-2200, ext. 5016

Joel Silverthorn—P/C
Senior Financial Analyst
(908) 439-2200, ext. 5120

Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK, N.J. - MAY 31, 2011 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of "a-" of United Heritage Life Insurance Company (United Heritage Life) (Meridian, ID). Concurrently, A.M. Best has revised the outlook to positive from stable and affirmed the FSR of B++ (Good) and ICR of "bbb+" of Sublimity Insurance Company (Sublimity) (Sublimity, OR).

A.M. Best also has affirmed the FSR of B++ (Good) and ICR of "bbb" of United Heritage Property and Casualty Company (UHPC) (Meridian, ID). The outlook for these ratings is stable. All companies are owned by United Heritage Financial Group, Inc. (UHFG).

The revised outlook reflects United Heritage Life's improved capital position and balance sheet quality and decreased realized loss position. While its capital position has fluctuated over the last five years, United Heritage Life reported a considerable increase in statutory capital in 2010, attributable to strong operating gains and a one-time benefit from a tax loss carry forward, which helped bolster its net income.

Additionally, the ratings reflect the company's overall positive operating performance, diverse business profile, increasing ordinary life premium growth trends and adequate risk-adjusted capitalization. Partially offsetting these strengths are United Heritage Life's high guaranteed crediting rates on the majority of its annuity business and related spread compression risk, asset-liability duration mismatching risk and the challenges to maintain adequate levels of risk-adjusted capitalization while growing its ordinary life business and sustaining its operating performance.

The revised outlook for Sublimity recognizes its excellent capitalization, supported by consistently favorable underwriting performance, along with a long-standing local market presence as a personal lines writer in Oregon, Utah and Idaho. These positive rating factors are offset by the company's somewhat concentrated book of business, compounded by its exposure to potential weather-related losses and by a relatively high expense structure.

The rating affirmations of UHPC's acknowledge its adequate capitalization, positive operating performance, diversification into the private passenger automobile line, as well as geographically into Utah and Oregon. These positive rating factors are offset by UHPC's periodic reserve deficiencies, fluctuating underwriting performance and the inherent risks involved in the growth of a new line of business, as well as those associated with territorial expansion.

The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Life and Health Insurers"; "Understanding BCAR for Property/Casualty Insurers"; and "Rating Members of Insurance Groups." Methodologies can be found at

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