A.M. Best Affirms Ratings of Independence Holding Company and Its Subsidiaries
November 21 2011 - 12:55PM
Business Wire
A.M. Best Co. has affirmed the financial strength rating
of A- (Excellent) and issuer credit ratings (ICR) of “a-” of
Madison National Life Insurance Company, Inc. (Madison
National) (Madison, WI), Standard Security Life Insurance
Company of New York (Standard Security) (New York, NY) and
Independence American Insurance Company (Independence
American) (New Castle, DE). Concurrently, A.M. Best has affirmed
the ICR of “bbb-” of the parent company, Independence Holding
Company (Independence Holding) (Stamford, CT) [NYSE: IHC]. The
outlook for all ratings is stable.
The ratings reflect the organization’s continuing product and
earnings diversification, conservative underwriting and improved
capitalization. Independence Holding’s insurance operations
continue to generate operating earnings across all lines of
business. Over the past few of years, the group has been
introducing several new lines of business to further diversify its
product portfolio. In addition, the organization has reported
improved loss ratios within its medical stop-loss and major medical
products from prior years. A.M. Best notes that the insurance
subsidiaries within Independence Holding have been placing
increasing emphasis on business written through controlled
distribution. These efforts have enabled Madison National, Standard
Security and Independence American to generate less volatile
operating results and enhance the organization’s risk-adjusted
capital position.
While operating earnings within Independence Holding and its
subsidiaries have remained fairly consistent, A.M. Best remains
concerned about the lack of growth within its core lines of
business. A.M. Best believes that the restructuring of its
distributors, competitive pressures and regulatory uncertainties
are the primary reasons for the organization’s limited growth.
Additionally, A.M. Best is concerned that the possibility of
another economic downturn could result in credit migration and
realized losses within the group’s investment portfolios. However,
A.M. Best recognizes that Independence Holding has taken several
steps over the past couple of years to de-risk its investment
portfolio and that the organization has moved into a statutory
unrealized gains position as of June 30, 2011.
A.M. Best believes Independence Holding is well positioned at
its current rating level in the near to medium term. Factors that
may lead to negative rating actions include a declining trend in
net premiums within the organization’s core lines of business,
material deterioration of risk-adjusted capital within the
insurance subsidiaries, or if future regulatory changes have a
measurable impact on future operating results.
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/Health
Insurers”; “Rating Health Insurance Companies”; “Rating Members of
Insurance Groups”; “A.M. Best’s Liquidity Model for U.S. Life
Insurers”; and “A.M. Best’s Perspective on Operating Leverage.”
Methodologies can be found at
www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and
most authoritative insurance rating and information source. For
more information, visit www.ambest.com.
Copyright © 2011 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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