A.M. Best Co. released ratings updates. The following are some of the most recent:

Optimum Reassurance Inc. and Optimum Re Insurance Co.

A.M. Best Co. affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Optimum Reassurance Inc. and its affiliate, Optimum Re Insurance Co. (collectively known as Optimum Re). The outlook for all ratings is stable.

The rating affirmations reflect that Optimum Re has consistently grown net premiums and net earnings, is a well regarded player in the life reinsurance industry and has fared better in terms of asset write-downs than a number of larger direct life writers and life reinsurers. Nevertheless, Optimum Re is small in absolute terms, and the ratings reflect the operating limitations imposed by the organization’s scale.

Transamerica Life Canada

A.M. Best Co. downgraded the FSR to B++ (Good) from A- (Excellent) and ICR to “bbb+” from “a-” of Transamerica Life Canada (TLC). The outlook for the FSR has been revised to stable from negative, and the outlook for the ICR is negative.

These rating actions recognize TLC’s continued weak financial performance. For year-end 2008, TLC recorded a net loss of CAD 583 million. The rating actions also reflect the contraction in TLC’s business profile as new management has implemented several de-risking initiatives in order to stabilize earnings.

Church Mutual Insurance Co.

A.M. Best Co. revised the outlook to negative from stable and affirmed the FSR of A+ ( Superior ) and ICR of “aa-” of Church Mutual Insurance Co.

The revised outlook reflects the rating agency’s concern of Church Mutual’s poor underwriting and operating performance in 2008 and first quarter 2009, which led to a drop in risk-adjusted capitalization and declining return measures, as well as its continued exposure to losses from weather-related events.

Auto-Owners Insurance Group
and Auto-Owners Life Insurance Co.

A.M. Best Co. affirmed the FSR of A++ ( Superior ) and ICR of “aa+” of Auto-Owners Insurance Group and its members. AOIG is comprised of five property/casualty companies led by Auto-Owners Insurance Co. and four wholly owned subsidiaries.

Additionally, A.M. Best has affirmed the FSR of A+ ( Superior ) and ICR of “aa-” of Auto-Owners Life Insurance Co. a wholly owned subsidiary of Auto-Owners Insurance Co. The outlook for all ratings is stable.

The ratings reflect AOIG’s superior capitalization, trend of solid operating earnings, diversified product offerings and well-established agency relationships. These positive factors are partially offset by the group’s declining underwriting income and concentration of business in Michigan, its leading state for premium production, which exposes it to challenging economic, legislative and regulatory environments, the rating agency says. Additionally, a significant portion of AOIG’s business is exposed to weather-related catastrophic losses and adverse legislative and regulatory actions in Florida , its second-largest state for premium production.

EMC Insurance Cos.

A.M. Best Co. has affirmed the FSR of A- (Excellent) and ICR of “a-” of EMC Insurance Cos., its property/casualty pool members and its separately rated member, EMC Reinsurance Co. (EMC Re). In addition, A.M. Best has affirmed the ICR of “bbb-” of the group’s publicly traded, downstream holding company, EMC Insurance Group Inc. The outlook for all ratings is stable.

The affirmation of EMC’s ratings reflects its excellent risk-adjusted capitalization, generally improved operating performance (albeit with weather and catastrophe losses significantly impacting 2008 results) and the continued benefits it derives from management’s actions in recent years associated with pricing and risk selecti on, A.M. Best says.

Farmers Mutual Fire Insurance Co. of Branch County

A.M. Best Co. has downgraded the FSR to B (Fair) from B+ (Good) and ICR to “bb” from “bbb-” of Farmers Mutual Fire Insurance Co. of Branch County. The outlook for both ratings is negative.

These rating actions reflect Farmers Branch ’s long-term trend of poor operating results and recent surplus deterioration. Earnings have been strained by unprofitable underwriting results, which occurred over several years due to frequent weather-related events and large fire-related losses. Additionally, Farmers Branchmaintains an elevated expense position that continues to hinder profitability. Furthermore, in 2008, surplus was negatively affected by dislocations in the financial markets, as the company’s equity investment leverage remains elevated. As a single-state property writer in Michigan , operating results will remain vulnerable to severe weather-related events, competitive, regulatory and financial market conditions. The rating outlook is based on Farmers Branch’s decline in risk-adjusted capitalization following several years of underwriting losses and recent dislocations in the financial markets.

Guarantee Trust Life Insurance Co.

A.M. Best Co. revised the outlook to negative from stable and affirmed the FSR of B+ (Good) and ICR of “bbb-” of Guarantee Trust Life Insurance Co.

The revised outlook reflects Guarantee Trust’s growth in premium income for its core line and A.M. Best’s growing concerns regarding the company’s reinsurance program and the sizeable amount of unrealized capital losses in its fixed income portfolio.

GeoVera Insurance Group

A.M. Best Co. revised the outlook to positive from stable and affirmed the FSR of A- (Excellent) and ICR of “a-” of GeoVera Insurance Group and its property/casualty members.

The ratings and outlook reflect GeoVera’s excellent capitalization, moderate underwriting leverage and management’s experience in its market segment, according to the rating agency. Profitable underwriting performance, combined with solid investment income and underwriting fee income, has improved the group’s capital position. The revised outlook also reflects A.M. Best’s expectation that the group will continue to produce profitable underwriting results, while maintaining excellent risk-adjusted capitalization.

EmblemHealth Inc.’s Insurance Subsidiaries

A.M. Best Co. downgraded the FSR to B (Fair) from B+ (Good) and ICR to “bb+” from “bbb-” for Health Insurance Plan of Greater New York (HIP), HIP Insurance Co. of New York and ConnectiCare Inc., all insurance subsidiaries of EmblemHealth Inc.

Additionally, A.M. Best has downgraded the FSR to C++ (Marginal) from B- (Fair) and ICRs to “b” from “bb-”of Group Health Incorporated (GHI) and GHI HMO Select Inc. The outlook for all ratings has been revised to negative from stable.

The rating downgrades reflect the underwriting losses, significant investment losses and declined capitalization, the rating agency says.

Electric Insurance Group and its Members

A.M. Best Co. affirmed the FSR of A (Excellent) and ICR of “a” of Electric Insurance Group and its members, Electric Insurance Co., Electric Insurance Ireland Ltd. and Electric Lloyd’s of Texas. The outlook for all ratings is stable.

These ratings reflect Electric Insurance Group’s solid capitalization, sustained operating profitability and the value added commercial insurance services that the group provides General Electric Co. The ratings also recognize the group’s customer service commitment, low-cost operating structure, e-commerce initiatives and prudent catastrophe management strategy, A.M. Best says.

MetLife Inc.’s SafeGuard Health Enterprises Inc. Subsidiaries

A.M. Best Co. assigned FSRs of A (Excellent) and ICRs of “a+” to MetLife Inc.’s subsidiaries: SafeGuard Health Plans Inc., SafeGuard Health Plans Inc. and SafeGuard Health Plans Inc. The outlook for all ratings is stable. The remaining ratings for MetLife and its subsidiaries remain unaffected.

The ratings are based upon the subsidiaries’ strategic role to the institutional product lines of MetLife, according to the rating agency. SafeGuard Health Enterprises Inc., through certain subsidiaries, provides dental health maintenance organization (DHMO) and vision plans to its membership. With the addition of the DHMO competency, the acquisition of SafeGuard has provided MetLife an avenue to expand its dental markets as a writer of managed dental benefits plans by adding over one million dental and vision members and a network of more than 11,000 participating DHMO dentist locations primarily serving Texas, Florida and California.

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access