OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” to Gulf Guaranty Life Insurance Company (GGLIC) (Jackson, MS). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect GGLIC’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
The ratings assigned to GGLIC reflect its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), its minimal use of reinsurance and adequate liquidity, as approximately 30% of its general account investment portfolio is composed of cash and short-term investments. However, these positive balance sheet factors are offset partially by the company’s relatively low amount of capital, which was approximately $12.6 million as of third-quarter 2019, and concentration of higher risk and less liquid assets in its investment portfolio. These include common stocks, real estate that is made up primarily of undeveloped land and residential mortgage loans. These assets combined comprise well over half of the company’s invested assets and almost 90% of capital and surplus. While GGLIC’s fixed-income securities are all investment grade, they remain highly concentrated within the financial sector.
GGLIC has experienced modestly positive operating results over the most-recent five-year period and a significant increase in premiums in more recent periods due its focus on growing its limited benefit medical expense group accident and health product line. While management is focused on growing its presence in the southeastern United States, the majority of premiums remain concentrated in just two states. Additionally, although the company has multiple product offerings that include final expense and credit life and accident and health insurance, the group accident and health line of business has driven premium growth solely in recent periods. AM Best expects this trend to continue over the near term, but notes that GGLIC has planned for additional product offerings to enhance its product portfolio.
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