A.M. Best Revises Outlook to Positive for the Oxford Life Insurance Company and Its Subsidiaries
April 27, 2012 by N/A
Best’s News Service – April 26, 2012 03:30 PM
OLDWICK, N.J. – A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B++ (Good) and issuer credit ratings of “bbb+” of Oxford Life Insurance Company (Oxford Life) (Phoenix, AZ) and its subsidiaries, North American Insurance Company (North American) (Madison, WI), Christian Fidelity Life Insurance Company (Christian Fidelity) and Dallas General Life Insurance Company (Dallas General) (both domiciled in Dallas, TX). Collectively, these companies are owned by their ultimate parent, AMERCO (Reno, NV) [NASDAQ: UHAL], which also is the parent of U-Haul International, Inc., North America’s leading “do-it-yourself” moving and storage operator.
The revised outlook reflects Oxford Life’s profitable and improved consolidated operating results, increased net premiums written and continued strong capital base. The group’s business strategy of focusing on the senior market has resulted in continued growth in its final expense, Medicare supplement and single premium whole life businesses over the past two years. A.M. Best notes that a major part of the growth is attributed to several strategic acquisitions by means of reinsurance arrangements; however, the group was able to maintain upward premium trends from its lines of business, while preserving high risk-adjusted capitalization. A.M. Best also notes that all subsidiary companies of Oxford Life were generally profitable on a standalone basis barring the impact of reinsurance transactions.
Partially offsetting these positive rating factors are the risks associated with the group’s senior market and its underlying product offerings such as final expense and Medicare supplement businesses, where the group may be challenged to sustain earnings momentum as intense competition and regulatory hurdles for Oxford Life’s market niche remains at the forefront. However, A.M. Best notes that Oxford Life, North American, Christian Fidelity and Dallas General have been reporting good profitability from their Medicare supplement businesses as a result of good loss ratios and price increases.
Forward looking, key rating factors that will improve Oxford Life’s ratings include top line organic premium growth and earnings diversification, sustaining good profitability within its core lines of business and continued favorable operating trends at AMERCO. Concurrently, the ratings could be impacted by significant earnings volatility, increased product concentration risks or high reliance on the Medicare supplement business, as well as any material deterioration in AMERCO’s balance sheet and operating results.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Understanding BCAR for Life/Health Insurers”; “Risk Management and the Rating Process for Insurance Companies”; and “Evaluating Non-Insurance Ultimate Parents.” Best’s Credit Rating Methodology can be found at http://www.ambest.com/ratings/methodology. BN-NJ-04-26-2012 1530 ET #