The Credit Ratings (ratings) reflect BIL’s strong risk-adjusted capitalization and low product risk profile.
On a risk-adjusted basis, BIL continues to demonstrate a strong level of risk-adjusted capitalization to support the company’s net required capital, as measured by Best's Capital Adequacy Ratio (BCAR). Despite some exposure to illiquid assets, BIL’s underwriting leverage remains conservative, and the company continues to focus on a high-frequency, low-severity line of business.
The revised outlooks reflect A.M. Best’s expectation that BIL will continue to report strong growth of its pet health insurance business without sacrificing its profitability. While overhead costs comprised approximately 90% of the total operating expenses, growth in premium revenue will likely outpace any growth in operating expenses. This is expected to help the company achieve more favorable underwriting results over the next several years.
A major offsetting rating factor is BIL’s limited business profile and small premium base.
While BIL continued to report favorable claims experience in a small market segment, its expense ratio remained considerably higher than other health insurers in
Positive rating actions could occur if BIL can improve its expense ratio to a level more comparable with its peers, while continuing to reduce its surplus exposure to illiquid assets. Negative rating actions could occur if there are material deviations from its target claim loss ratio or substantial asset impairment.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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