AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) of Unified Life Insurance Company (Unified Life) (headquartered in Overland Park, KS). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Unified Life’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
The outlook assignment of stable reflects capital and surplus and risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), that is greater than what AM Best had projected for full-year 2022. AM Best had projected a BCAR assessment of weak for 2022, based on Unified Life’s expected net loss and a potential material increase to the change in net unrealized capital losses. However, better-than-expected results on the company’s reported net income and its change in net unrealized capital losses resulted in a BCAR assessment of adequate for 2022. Furthermore, capital and surplus grew slightly through the first quarter of 2023, driven by net income and a decrease in non-admitted assets.
Unified Life reported a pretax net operating gain in 2022 after reporting a pretax net operating loss in 2021. The improvement was driven by investment income exceeding lower claims, direct commissions and administration allowances from the runoff of the company’s group hospital indemnity product, reduced general expenses and surrenders. Unified Life lacks a material market share or developed economies of scale in any specific line of business, and the company faces increasing competition for supplemental accident and health blocks.
Unified Life has a formal ERM program. However, the company has experienced unanticipated regulatory, market and operational risks from several of its formerly marketed products, which have negatively impacted its balance sheet strength in recent years.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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