A.M. Best Downgrades Ratings of Universal Fidelity Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the financial strength rating (FSR) to B (Fair) from B+ (Good) and issuer credit rating (ICR) to “bb+” from “bbb-” of Universal FidelityLife Insurance Company (Universal Fidelity Life) (Oklahoma City, OK). The outlook for both ratings has been revised to stable from negative.

The rating actions reflect Universal Fidelity Life’s significantly lower operating results since 2008 and the decline in its absolute capital and surplus, which resulted from higher expenses incurred from the marketing of a new single premium whole life product, investment in a new line of third-party administrative (TPA) services and maturing business lines. Additionally, the company is exposed to marketing and regulatory risks as its risk business is concentrated in student accident insurance. A.M. Best believes Universal Fidelity Life will be challenged to achieve its short-term financial projections due to a highly competitive student accident market, which may experience lower profit margins and possible adverse impact from health care reform.

Universal Fidelity Life’s implemented business improvement initiatives in 2010-2011 included improved selection in its student accident business, a significant reduction in general and administrative expenses, a reduction in sales of its capital intensive single premium whole life product and growth in its ERISA TPA revenue.

Universal Fidelity Life markets primarily TPA services nationally and student accident and life insurance products chiefly in the south central United States. The company is currently focusing on partnering with other carriers to market life and Medicare supplement products, in addition to growing its TPA business.

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” and “Risk Management and the Rating Process for Insurance Companies.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best CompanyBrian Virostek, 908-439-2200, ext. 5531
Financial Analyst
[email protected]
or
Jeffrey Lane, 908-439-2200, ext. 5567
Managing Senior Financial Analyst
[email protected]
orRachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
orJim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.