OLDWICK: AM Best has revised the Long-Term Issuer Credit Rating (Long-Term ICR) outlook to positive from stable and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb” of Liberty Union Life Assurance Company. [the_ad id=”32940″]The outlook for the FSR remains stable.
The ratings reflect Liberty Union Life’s balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.
The revised Long-Term ICR outlook for Liberty Union Life reflects significantly higher operating and net income reported in 2018, driven by a sizable release of excess reserves that materially strengthened the company’s absolute capital and surplus, as well as its estimated Best’s Capital Adequacy Ratio.
However, AM Best notes that the company’s level of absolute capital and surplus remains relatively modest.
Liberty Union Life continues to be challenged by a limited business profile, reflecting its modest market share, a business concentration in its small group fully funded medical stop loss product and geographic concentration in Michigan, as well as highly competitive major medical and supplemental accident and health markets, which include larger national and regional health carriers.
Liberty Union Life also has been challenged by overall marginal operating performance in recent years, reflecting a downward trend in net premium that has been driven by terminations of medical stop-loss business due to rate increases and the runoff of its closed major medical and mini-med segments.
Generally unfavorable underwriting experience during this period has resulted in nominal operating gains and net income, as well as modest operating and net losses in 2017.
Additionally, the company’s return on equity and return on revenue metrics have been below industry averages.