A.M. Best Maintains Ohio National Rating Despite Recent Upheaval

By John Hilton InsuranceNewsNet

Ratings house A.M. Best is maintaining strong ratings for Ohio National Life despite a roller-coaster three-month period for the company.

A.M. Best recently met with the Ohio National management team to discuss the series of changes, which include getting out of the annuity business, and abandoning contracts on certain variable annuities. Ohio National has been sued by several brokers for the latter decision.

Christopher Carlson took over as chief operations officer in August, only to be replaced last month by Barbara A. Turner.

"A.M. Best has concluded that these events as described above are not expected to have a meaningful near-term impact on A.M. Best’s view of the credit profile of the Ohio National Life Group," the ratings service said in a press release. "Nevertheless, A.M. Best will monitor the impact of these and any future developments and take any necessary rating actions as warranted."

A.M. Best holds a financial strength rating of A+ (Superior) and long-term issuer credit ratings of “aa-ˮ for Ohio National. The stable outlook of these credit ratings is also unchanged.

In September, Ohio National stopped accepting applications for the purchase of annuity products to focus its resources on its core life insurance and disability income businesses. At the end of that month, the company announced that it was terminating payments of trail commissions on VAs with a guaranteed minimum income benefit rider. The GMIB is appealing to clients looking for guaranteed income in retirement.

Ohio National informed broker-dealers in a Sept. 28 letter that it will terminate "any and all servicing agreements" on Dec. 12. The company has been sued twice so far by broker-dealers.

In addition to its decision to stop paying trail commissions, Ohio National followed up with an Oct. 29 email to clients offering a buyout of the VA contracts with the GMIB rider.

Ohio National distributes life and annuities through an independent producing general agent channel with about 11,000 agents, and through a career agency channel with about 4,000 agents, the company said. Career agents are apparently unaffected by the decision to stop paying trails on VAs with a GMIB.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.