AM Best Affirms Credit Ratings of Mutual of Omaha Insurance Company and Its Subsidiaries
March 7, 2023 by AM Best
OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of “aa-” (Superior) of Mutual of Omaha Insurance Company and its subsidiaries, United of Omaha Life Insurance Company, Companion Life Insurance Company (Melville, NY) and United World Life Insurance Company. Concurrently, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “a” (Excellent) of Mutual of Omaha Insurance Company’s surplus notes. (Please see below for a detailed listing of the IRs.) The outlook of these Credit Ratings (ratings) is stable. The group (collectively referred to as Mutual of Omaha) is domiciled in Omaha, NE, unless otherwise specified.
The ratings reflect Mutual of Omaha’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
AM Best views Mutual of Omaha’s balance sheet strength as very strong. The group’s risk-adjusted capitalization is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The consolidated organization reported favorable growth of its capital and surplus level in 2021, which was driven by earnings and unrealized gains. However, the organization reported a decreased level through third-quarter 2022, impacted by a net loss, unrealized capital losses and a change in reserve valuation. The appropriate level of reinsurance has allowed risk mitigation that assists in the preservation of capital. Mutual of Omaha’s capital position provides support to risks related to insurance and investments on a consolidated basis. AM Best also has noted that the organization’s adjusted financial leverage was maintained at approximately 8.6%, which is considered low, and interest coverage of 5 times in 2021. In addition, operating leverage was within AM Best’s tolerance level. Mutual of Omaha has good financial flexibility and maintains a line of credit through a syndicate of banks, as well as borrowing capacity from the Federal Home Loan Bank of Topeka.
Mutual of Omaha’s operating performance is viewed as strong by AM Best. The organization continues to report favorable premium growth across nearly all business units, which continued through third quarter 2022. Earnings results in 2021 were lower than the previous year’s record level; however, it did remain favorable. Earnings declined through third-quarter 2022, and was driven by statutory strain of new sales, lower value of equities, corporate-owned life insurance and changing interest rates, as well as weaker mortgage results due to market conditions.
AM Best views Mutual of Omaha’s business profile as favorable. The organization is well-recognized in the insurance and retirement markets, with a leading market position in Medicare supplement and a top 10 position in the group’s disability and voluntary product segments, as well as in established retirement services. Mutual of Omaha offers a diversified profile of product lines including Medicare supplement, life insurance, annuity, retirement, institutional, long-term care and supplemental health products. As part of a customer focused strategy, the company offers financial products and services principally through five strategic business units. Mutual of Omaha operates in all 50 states, as well as the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands.
Mutual of Omaha’s ERM program is assessed as appropriate by AM Best. The organization has a formal ERM program with an established governance structure. The program is overseen by the board of directors, management and other personnel, and there is an expansion of its risk culture throughout the organization.
Economic capital modeling is utilized to assess risks and allocate capital based upon and to help support business decisions.
The following Long-Term IRs have been affirmed with a stable outlook:
Mutual of Omaha Insurance Company—
— “a” (Excellent) on $300 million 6.95% surplus notes, due 2040
— “a” (Excellent) on $300 million 6.80% surplus notes, due 2036
— “a” (Excellent) on $300 million 4.297% surplus notes, due 2054
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.
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