AM Best Withdraws Credit Ratings of ERAC Group Members
OLDWICK, N.J.--(BUSINESS WIRE)--Mar 26, 2019--AM Best has affirmed the Financial Strength Rating (FSR) of B+ (Good) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “bbb-”of the Employers Reassurance Corporation and Union Fidelity Life Insurance Company (both domiciled in Overland Park, KS) (collectively referred to as the ERAC Group). The outlook of these Credit Ratings (ratings) remains stable. Concurrently, AM Best has withdrawn the ratings at the request of the company to no longer participate in AM Best’s interactive rating process.
The ratings reflect ERAC Group’s balance sheet strength, which AM Best categorizes as weak, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. The ratings of the ERAC Group are supported by the implicit and explicit capital support (evidence through capital maintenance agreements) provided by its parent, General Electric Company. In addition, AM Best continues to have concerns due to the continued low interest rate environment and poor performance in the company’s long-term care (LTC) blocks of business.
The weak balance sheet assessment is reflective of ERAC Group’s continued fairly weak level of risk-adjusted capitalization. ERAC Group’s marginal operating performance has been affected by historical weak earnings trends, as its LTC business continues to be unprofitable relative to original actuarial expectations, requiring a continued reliance on funding from the ultimate parent. The company’s business profile is limited due to the continued run-off nature of the business, along with the volatile nature that is associated with the majority of LTC business on its books, and the high interest-sensitive reserves related to structured settlements.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases .
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KEYWORD: UNITED STATES EUROPE NORTH AMERICA NEW JERSEY
INDUSTRY KEYWORD: PROFESSIONAL SERVICES INSURANCE
SOURCE: AM Best
Copyright Business Wire 2019.
PUB: 03/26/2019 03:59 PM/DISC: 03/26/2019 03:59 PM