A.M. Best Affirms Credit Ratings of Independence Holding Company and Its Subsidiaries
23 December 2016 - 5:59AM
Business Wire
A.M. Best has affirmed the Financial Strength Rating of
A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term
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) (Wilmington, DE), all subsidiaries of
Independence Holding Company (Independence Holding)
(headquartered in Stamford, CT) [NYSE:IHC]. Concurrently, A.M. Best
has affirmed the Long-Term ICR of “bbb-” of Independence Holding.
The outlook for these Credit Ratings (ratings) is stable.
The ratings of the core operating affiliates of Independence
Holding reflect the group’s more-than-adequate level of
risk-adjusted capital, focus on diversified premium growth and
continued profitability. The group's consolidated risk-adjusted
capital position, as measured by Best's Capital Adequacy Ratio
(BCAR), has remained strong for the last five years and has been
supported by a trend of favorable earnings. More recently, the
proceeds from the sale of the organization’s stop-loss business
increased capital while decreasing the premium base, particularly
at Standard Security. While there is a possibility for sizeable
dividend from that entity to the holding company in the near term,
A.M. Best expects the level of risk-adjusted capitalization to
remain more than adequate to support the organization’s risks. Over
the last several years, the group has been transitioning from a
primarily major medical and stop-loss writer to a specialty
benefits writer with fully insured ancillary medical offerings,
including limited medical, short-term medical, critical illness,
non-subscriber occupational accident and pet insurance. While
revenue from these new insurance products is expected to remain
significantly lower compared with the major medical and medical
stop-loss premium written prior, the organization is focused on
underwriting and pricing discipline for continued profitable
growth.
Following the sale of the stop-loss block of business, the
company's business profile has weakened, as the stop-loss business
represented more than 40% of the organization's combined premium in
2015. This has negatively impacted operating results, evidenced by
a 27% decline in net income year over year through the third
quarter of 2016. However, excluding the impact of the sale of the
annuity block of business at Madison National in 2015, net income
declined by 10%. A.M. Best is concerned that near-term future
earnings will continue to be pressured due to a lack of scale and
the highly competitive marketplace as midsize and large carriers
are looking toward the supplemental health segment for additional
sources of revenue. However, the organization is more than
sufficiently capitalized to support the existing risks and
potential future growth, as well as withstand possible earnings
fluctuations.
This press release relates to Credit Ratings 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. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20161222005669/en/
A.M. BestCraig Draghi, +1 908 439 2200, ext.
5164Financial
Analystcraig.draghi@ambest.comorDoniella Pliss, +1
908 439 2200, ext. 5104Associate
Directordoniella.pliss@ambest.comorChristopher
Sharkey, +1 908 439 2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim
Peavy, +1 908 439 2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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