OLDWICK: AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of SWBC Life Insurance Company (SWBC Life) (San Antonio, TX). The outlook of the Long-Term ICR has been revised to stable from positive while the FSR outlook remains stable.
[the_ad id=”32940″]The ratings reflect SWBC Life’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The Long-Term ICR upgrade reflects an overall improvement in AM Best’s assessment of the company’s ERM program. In 2018, the company formally established a risk policy, which has enhanced its risk framework with a clear identification of risks, risk tolerances and risk appetite statements.
This enhanced risk policy should allow SWBC Life to manage risk identification more effectively through additional evaluation of risk assessments, along with mitigation efforts with further monitoring by all senior managers.
The ratings also recognize that SWBC Life’s ultimate parent, Southwest Business Corporation (SWBC), maintains a robust cybersecurity program as part of the company’s overall risk management process.
As part of its cybersecurity program, SWBC focuses on risk identification and threat detection, as well as incident response and recovery planning, to maximize its resiliency.
Partially offsetting these positive rating factors is the company’s modest absolute capital and surplus level, although the company has recorded a strong compounded annual growth rate of 8.0% over the last five years as a result of organic growth.
The company operates exclusively in the highly competitive credit insurance marketplace and historically and currently writes a significant majority of the direct business in just one state, which contributes to a concentrated regulatory and economic profile.
However, AM Best acknowledges the progress management has made in geographic expansion to date.