AM Best Information Services

MAY 20, 2014 04:37 PM (EDT)

A.M. Best Upgrades Ratings of United Heritage Property & Casualty Company

Maurice Thomas—P/C
Senior Financial Analyst
(908) 439-2200, ext. 5794

Marisa Bernardes—L/H
Financial Analyst
(908) 439-2200, ext. 5802

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

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


OLDWICK - MAY 20, 2014 04:37 PM (EDT)
A.M. Best has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and the issuer credit rating to "a-" from "bbb" of United Heritage Property & Casualty Company (UHPC).

In addition, A.M. Best has affirmed the FSRs of A- (Excellent) and the ICRs of "a-" of UHPC's property/casualty affiliates, Sublimity Insurance Company (Sublimity, OR) and Merced Property & Casualty Insurance Company (Atwater, CA), as well as its life affiliate, United Heritage Life Insurance Company (UHLIC). The outlook for all ratings is stable. All companies are domiciled in Meridian, ID, unless otherwise specified.

The rating upgrades for UHPC recognize the implicit and explicit support provided by its parent, United Heritage Financial Group, Inc. (UHFG), which has infused capital into UHPC several times over the past 10 years in order for it to maintain an adequate level of risk-adjusted capitalization relative to the premium writings and other financial risks. UHPC also benefits from numerous shared services including, but not limited to, investments, treasury, financial reporting, information technology, human resources, legal, regulatory compliance and specific actuarial functions. In addition, the ratings and outlook for UHPC continue to reflect its adequate risk-adjusted capitalization, historically favorable operating performance, conservative investment philosophy and long-term agency relationships.

These positive rating factors are partially offset by UHPC's geographic concentration and exposure to weather-related events as observed in 2013 when underwriting results fell below historical levels. Also, over the past several years, substantial premium growth has caused a gradual increase in underwriting leverage measures.

The rating affirmations for UHLIC acknowledge its adequate risk-adjusted capitalization, overall positive operating performance, diverse business profile and increasing ordinary life premium growth trends. Partially offsetting these strengths are UHLIC'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 sustain and improve its overall operating performance while growing the business.

A.M. Best expects that UHFG will remain committed to maintaining an appropriate level of capital to support UHPC's growth initiatives going forward. However, negative rating actions may occur if net premium growth exceeds A.M. Best's expectations and/or significant deterioration in operating results or risk-adjusted capitalization were to occur.

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

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