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AM Best Affirms Credit Ratings of Assurant, Inc. and Its Core Subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A
(Excellent) and the Long-Term Issuer Credit Ratings (Long Term ICR) of
“a+” of the U.S. property/casualty (P/C) subsidiaries of Assurant, Inc.
(Assurant) (headquartered in New York, NY) [NYSE: AIZ]. In addition, AM
Best has affirmed the FSR of A- (Excellent) and the Long Term ICRs of
“a-” of the core U.S. life/health (L/H) subsidiaries of Assurant, which
comprise the organization’s current writers of domestic and foreign
preneed life insurance, and U.S. and Canada-based credit life and health
insurance operations. AM Best also has affirmed the Long-Term ICR of
“bbb+”and the Long- and Short-Term Issue Credit Ratings (Long-Term IR;
Short-Term IR) of Assurant. The outlook of these Credit Ratings
(ratings) is stable. Concurrently, AM Best has downgraded the FSR to B++
(Good) from A- (Excellent) and the Long-Term ICRs to “bbb+” from “a-” of
Union Security Insurance Company (USIC) (headquartered in Kansas City,
MO) and Union Security Life Insurance Company of New York (USLICNY)
(Fayetteville, NY). The outlook of these ratings have been revised to
stable from negative. (See below for a detailed list of the companies
and Long- and Short-Term IRs.)

The ratings reflect Assurant’s balance sheet strength, which AM Best
categorizes as very strong, as well as its strong operating performance,
favorable business profile and appropriate enterprise risk management
(ERM).

The company maintains leadership positions in the delivery of
lender-placed homeowners insurance, mobile protection insurance, vehicle
service contracts, extended service contracts and credit-related
insurance products, and maintains a large customer base through its
large number of distribution sources in North America. The group’s
diversified product and distribution platforms, along with its
technology focus, has delivered strong earnings over the past five years
despite periods of significant catastrophe losses.

Somewhat offsetting these positive ratings factors are the P/C group’s
natural catastrophe exposure and its continued dependence on third-party
reinsurance. These factors expose the P/C group’s earnings to a degree
of variability. However, these concerns are mitigated somewhat by its
geographic spread of risk, management’s use of risk management tools —
including tracking aggregation of risks — and product design.

Assurant’s domestic and Canada-based preneed companies, American
Memorial Life Insurance Company (American Memorial) (Rapid City, SD) and
Assurant Life of Canada (ALOC) (Toronto, Canada), are the main entities
of Assurant’s Global Preneed business segment. The ratings of American
Memorial reflect its balance sheet strength, which AM Best categorizes
as adequate, as well as its strong operating performance, favorable
business profile and appropriate ERM. American Memorial is one of the
largest writers of preneed life insurance in the United States. Its
preneed business has experienced favorable premium growth trends over
the past five years; however, AM Best notes that American Memorial’s
preneed business sales are tied primarily to one core distribution
channel, which exposes the segment to concentration risk.

The ratings of ALOC reflect its balance sheet strength, which AM Best
categorizes as adequate, as well as its strong operating performance,
neutral business profile and appropriate ERM. ALOC is the leading writer
in Canada’s preneed market and maintains good geographic diversity
within Canada’s provinces. AM Best also notes that distribution is much
more diverse within the Canadian operations.

The ratings of Assurant’s credit L/H insurance companies — American
Bankers Life Assurance Company of Florida (Miami, FL) and Caribbean
American Life Assurance Company (San Juan, PR) — reflect their balance
sheet strength, which AM Best categorizes as strong, as well as their
strong operating performance, limited business profile and appropriate
ERM. Risk-adjusted capital measures are maintained at the strongest
levels, driven by consistent net operating gains over the past few
years. Assurant is a market leader in credit insurance in Canada and
Puerto Rico, where they have maintained relationships with most of the
major banks in these two countries; however, its U.S. domestic credit
insurance business continues to decline, driven by regulatory changes
affecting credit insurance sold through banks and credit cards.

The ratings of USIC and USLICNY reflect their balance sheet strength,
which AM Best categorizes as strong, as well as their adequate operating
performance, limited business profile and appropriate ERM. The rating
downgrades of USIC and USLICNY reflect the diminished business profile
assessment and reduced strategic importance for these entities going
forward following the sale of its employee benefits business to Sun Life
Financial, Inc. (Sun Life) in March 2016. The companies, as part of a
transition agreement with Sun Life, continued to write and renew
business, and reinsure 100% of the business to Sun Life. A significant
majority of the employee benefit business either has been transitioned
off these entities’ paper, or is expected to be transitioned in the near
term. Additionally, there is a new fronting arrangement on Medicare
supplement business, which is not a material driver of revenue or
earnings, and run-off preneed insurance liabilities. AM Best will
continue to monitor the runoff of the remaining business in these
entities for profitability, capital adequacy and the level of implicit
and explicit capital support, as well as any changes to the operational
and strategic use of these legal entities.

The FSR of A (Excellent) and the Long-Term ICRs of “a+” have been
affirmed with stable outlooks for the following P/C subsidiaries of
Assurant, Inc.:

  • American Bankers Insurance Company of Florida
  • American Security Insurance Company
  • Standard Guaranty Insurance Company
  • Caribbean American Property Insurance Company
  • Voyager Indemnity Insurance Company
  • Reliable Lloyds Insurance Company

The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have been
affirmed with stable outlooks for the following L/H subsidiaries of
Assurant, Inc.:

  • American Memorial Life Insurance Company
  • American Bankers Life Assurance Company of Florida
  • Caribbean American Life Assurance Company
  • Assurant Life of Canada

The FSR was downgraded to B++ (Good) from A- (Excellent), the Long-Term
ICRs downgraded to “bbb+” from “a-” and the outlooks revised to stable
from negative, for the following L/H subsidiaries of Assurant, Inc.:

  • Union Security Insurance Company
  • Union Security Life Insurance Company of New York

The following Long-Term IRs have been affirmed with stable outlooks:

Assurant, Inc.—

— “bbb+” on USD 300 million 4.90% senior unsecured bonds, due 2028

— “bbb+” on USD 300 million floating senior unsecured bonds, due 2021

— “bbb+” on USD 300 million 4.20% senior unsecured bonds, due 2023

— “bbb+” on USD 350 million 4.00% senior unsecured bonds, due 2023

— “bbb+” on USD 375 million 6.75% senior unsecured bonds, due 2034

— “bbb” on USD 400 million 7.00% subordinated bonds, due 2048

— “bbb-” on USD 288 million 6.50% preferred securities, due 2021

The following Short-Term IR has been affirmed:

Assurant, Inc.—

— AMB-1 on commercial paper

The following indicative Long-Term IRs on securities available under the
shelf registration have been affirmed with stable outlooks:

Assurant, Inc.—

— “bbb+” on senior unsecured

— “bbb” on subordinated debt

— “bbb-” on preferred stock

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
.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Edin Imsirovic
Senior Financial Analyst—P/C
+1
908 439 2200, ext. 5740

edin.imsirovic@ambest.com

Wayne Kaminski
Senior Financial Analyst—L/H
+1
908 439 2200, ext. 5061

wayne.kaminski@ambest.com

Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644

james.peavy@ambest.com

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