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AM Best Revises Outlooks to Negative for Merit Life Insurance Co.

·3 min read

OLDWICK, N.J., September 16, 2022--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" (Excellent) of Merit Life Insurance Co. (Merit) (Austin, TX).

The Credit Ratings (ratings) reflect Merit’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The revision in the outlooks to negative from stable reflects the pressure on the operating performance and business profile following significant delays executing Merit’s initial business strategy due in part to headwinds such as the slow market acceptance of the contingent deferred annuity product. The new management team has been actively working to address these issues; it remains to be seen if these actions will prove effective over the near term.

Merit’s balance sheet strength remains at the very strong level, bolstered by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the general investment account portfolio is expected to be diversified with favorable liquidity.

Merit’s operating performance has been assessed based solely on projections provided by Merit and include assumptions around expenses and income generation. Prospective earnings likely will be derived primarily from fees earned on protected assets and will be subject to market fluctuations. The company expects sales to begin in the second half of 2022.

AM Best views the business profile as limited based on the limited product offerings and distribution channels.

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 Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Elizabeth Blamble
Senior Financial Analyst
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Christopher Sharkey
Manager, Public Relations
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Erik Miller
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Al Slavin
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