AM Best


A.M. Best Upgrades Issuer Credit Ratings of Assurant, Inc. and Its Property/Casualty Subsidiaries


CONTACTS:

Susan Molineux
Senior Financial Analyst – P/C
(908) 439-2200, ext. 5829
susan.molineux@ambest.com

Michael Adams
Senior Financial Analyst – L/H
(908) 439-2200, ext. 5133
michael.adams@ambest.com
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JANUARY 27, 2016 02:57 PM (EST)
A.M. Best has upgraded the issuer credit ratings (ICR) to “a+” from “a” and affirmed the financial strength rating (FSR) of A (Excellent) of the U.S. property/casualty subsidiaries of Assurant, Inc. (Assurant) (headquartered in New York, NY) [NYSE: AIZ]. Additionally, A.M. Best has upgraded the ICR to “bbb+” from “bbb” and the issue ratings of Assurant. The outlook for the ICR of the property/casualty subsidiaries, the holding company and the issue ratings has been revised to stable from positive, while the outlook for the FSR of the property/casualty subsidiaries remains stable. A.M. Best also has affirmed the FSR of A- (Excellent) and the ICRs of “a-” of American Memorial Life Insurance Company (American Memorial) (Rapid City, SD) and Assurant Life of Canada (ALOC) (Toronto, Canada), which are writers of domestic and foreign preneed life insurance for Assurant. Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the ICRs of “a-” of American Bankers Life Assurance Company (Miami, FL) and Caribbean American Life Assurance Company (San Juan, PR), which comprise Assurant’s credit life and health insurance operations. The outlook for these life/health subsidiaries of Assurant remains stable. (See link below for a detailed listing of the companies and ratings.)

The upgrade of the ICRs of Assurant’s property/casualty subsidiaries reflects the group’s strong operating performance, supportive risk-adjusted capitalization and well-established presence in various specialty markets. Offsetting these positive rating factors are the group’s significant exposure to natural catastrophes and its dependence on third-party reinsurance.

These positive rating attributes are derived from the organization’s leadership position in the delivery of lender-placed homeowners insurance, mobile protection insurance, vehicle service contracts, extended service contracts, credit-related insurance products and manufactured housing insurance, as well as a vast customer base through its large number of distribution sources in North America. The group’s diversified product and distribution platforms and technology focus has delivered strong earnings over the past five years, despite periods of significant catastrophe losses and the adverse impact of weak macroeconomic conditions on revenue, particularly for the service contract business.

Somewhat offsetting these positive ratings factors are the property/casualty group’s natural catastrophe exposure, and its continued dependence on third-party reinsurance. These factors expose the property/casualty group’s earnings to a degree of variability. These concerns are somewhat mitigated by its geographic spread of risk, management’s use of risk management tools, including tracking aggregation of risks, and product design.

Price reductions and lower placement rates in the group’s lender-placed hazard product have impacted underwriting revenues from the insurance operations; however, A.M. Best anticipates underwriting profitability to remain strong. At the enterprise level, expansion of non-insurance service products continues to diversify the mix of business and minimize the impact of this reduction on overall revenues and returns over time.

Also offsetting the positive rating factors is the importance of consumer credit in driving usage of many of the property/casualty products. The property/casualty group could be challenged to sustain current premium levels due to lower credit usage. At the same time, higher utilization may result in deteriorating loss performance.

A.M. Best will continue to monitor the effect of macroeconomic conditions, including suppressed activity in the mortgage service industry, on the property/casualty group’s underwriting and operating profitability.

Assurant’s ratings recognize its diverse business mix, established presence in numerous niche markets, strong operating results and risk-adjusted capitalization. As of Sept. 30, 2015, Assurant’s unadjusted debt-to-capital and debt-to-tangible capital ratios were approximately 21% and 26%, respectively, with a fixed charge coverage ratio that is well supportive of its ratings. Assurant also maintains a $400 million commercial paper program, which is secured by a back-up $400 million credit facility.

The ratings of Assurant’s domestic and Canadian preneed companies acknowledge their consistent statutory premium growth trends, favorable operating earnings and adequate risk-adjusted capital positions. Within these operations, American Memorial is one of the largest writers of preneed life insurance in the United States, and ALOC is by far the leading writer in the Canadian preneed market. A.M. Best notes that American Memorial’s preneed business sales are primarily tied to one distribution channel, exposing the segment to significant concentration risk. However, the company has added product offerings in recent periods, including its final need insurance product line. A.M. Best also notes that distribution is much more diverse within the Canadian operations.

While the persistent low interest rate environment continues to present a challenge for companies marketing preneed and final expense products, Assurant’s preneed companies have responded to these challenges by adjusting product design and managing the duration of its asset and liabilities. As a result, sales and operating earnings continue to be favorable despite current unfavorable macroeconomic factors.

The ratings of Assurant’s credit life and health insurance companies recognize their stable earnings and solid capitalization, despite historically sizeable dividends paid to the holding company and a contracting business. The companies continue to experience declining premiums due to economic pressures and changes in the regulatory environment in the United States. In addition, the companies have been impacted by unfavorable foreign currency fluctuations in recent periods. However, A.M. Best recognizes that Assurant remains focused on growing credit life and health insurance premiums in Canada and Puerto Rico, where the regulatory environment remains more favorable for credit insurance products. A.M. Best also notes that Assurant remains a recognizable name in these markets.

The ratings of Assurant’s employee benefits companies remain under review (please see press release issued on Sept. 11, 2015) pending the close of the recently announced acquisition by Sun Life Financial, Inc. The transaction is expected to close during the first quarter of 2016.

The ratings of Assurant’s health companies also remain unchanged.

For a complete listing of Assurant, Inc. and its subsidiaries’ FSRs, ICRs and issue ratings, please visit Assurant, Inc.

This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.


Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.