A.M. Best Affirms Ratings of Employers Reassurance Corp. and Union Fidelity Life Insurance Company [Manufacturing Close – Up]

A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings of "a-" of Employers Reassurance Corp. (ERAC) and Union Fidelity Life Insurance Company (UFLIC) (both domiciled in Overland Park, KS) (collectively referred to as the ERAC group).

The outlook for all ratings is stable.

The ratings of ERAC group are based upon the consolidated financial results of the two companies. The group also maintains adequate risk-adjusted capitalization, strong liquidity and financial wherewithal, which includes a capital maintenance agreement from its parent, General Electric Capital Corp. (GECC), whose parent is General Electric Company. On a combined basis, ERAC group reinsures mortality long-term care, structured settlement annuities and other business lines.

Offsetting these positive rating factors are ERAC group's continued operating losses due to reserve strengthening as a result of the low interest rates and business experience associated with its long-term care and certain other business lines. Additionally, the possibility that meaningful statutory earnings may not emerge within the medium term, which will require ongoing capital support in this low interest rate environment.

A.M. Best believes the ERAC group is well positioned at its current rating level. Factors that could result in negative rating actions include a significant decline in ERAC group's risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR) model, diminished support from the parent or deterioration in the credit worthiness of GECC.

More information:

ambest.com

((Comments on this story may be sent to [email protected]))