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AM Best Upgrades Issuer Credit Rating of Liberty Union Life Assurance Company

AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to "bb+" from "bb" and affirmed the Financial Strength Rating (FSR) of B (Fair) of Liberty Union Life Assurance Company (Liberty Union Life) (Troy, MI). The outlook of the Long-Term ICR has been revised to stable from positive, while the outlook of the FSR remains stable.

The Credit Ratings (ratings) reflect Liberty Union Life’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.

The upgrade of the Long-Term ICR reflects Liberty Union Life’s strengthened risk-adjusted capitalization over the past two years, driven by a sizable release of excess reserves in 2018 that increased the company’s absolute capital and surplus materially, as well as its Best’s Capital Adequacy Ratio (BCAR). However, AM Best notes the company’s relatively modest level of absolute capital and surplus, as well as its limited financial flexibility.

Liberty Union Life’s overall operating performance has been unfavorable in recent years. Net premiums had been on a downward trend through 2018, driven by terminations of medical stop-loss business due to rate increases and the runoff of its closed major medical and mini-med segments. The company reported net premium growth in 2019, as a result of new medical stop-loss sales in the Midwest, outside of Michigan. Liberty Union

Life has reported a trend of underwriting losses, which has contributed to nominal operating gains and net income during this period, as well as modest operating and net losses in 2017. The operating gain reported in 2018 was driven by the reserve release. Furthermore, its return on equity and return on revenue metrics have been below industry averages.

Liberty Union Life continues to be challenged by a limited business profile, reflecting its nominal market share within its operating area, a business concentration in its small group medical stop-loss product and geographic concentration in Michigan, as well as highly competitive medical stop-loss and supplemental accident and health markets, which include larger national and regional health carriers.

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 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 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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Contacts

Brian Virostek
Financial Analyst
+1 908 439 2200, ext. 5531
brian.virostek@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Bridget Maehr
Associate Director
+1 908 439 2200, ext. 5321
bridget.maehr@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com