A.M. Best Revises Outlook to Stable for Gulf Guaranty Life Insurance [Professional Services Close – Up]

Proquest LLC

A.M. Best Co. has revised the outlook to stable from positive and affirmed the financial strength rating of B- (Fair) and issuer credit rating of "bb-" of Gulf Guaranty Life Insurance Company (Jackson, MS).

In a release on May 15, A.M. Best noted that the revision to the outlook reflects higher volatility in Gulf Guaranty Life's net income, with losses occurring in three of the last five years including 2012. The modest operating performance reflects weak underwriting performance, modest investment returns and relatively flat credit insurance sales in recent years due to continued maintenance of tight lending standards by financial institutions.

The ratings continue to reflect Gulf Guaranty Life's more than adequate level of risk-adjusted capitalization relative to its current ratings, bond portfolio and some progress in expanding its business profile through life sales marketed to the funeral home market.

Factors that could lead to positive rating actions for Gulf Guaranty Life include a more consistent trend of positive net income, successful profitable revenue diversification or continued maintenance of satisfactory levels of risk-adjusted capital. The potential exists for future negative rating actions should Gulf Guaranty Life experience additional operating losses in its recently introduced group accident and health business, weakness occurs in its core credit insurance segment or its risk-adjusted capitalization deteriorates materially from current levels.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides an explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process.

A.M. Best Company is an insurance rating and information source.