A.M. Best Revises Outlooks to Negative for Funeral Directors Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Funeral Directors Life Insurance Company (FDLIC) (Abilene, TX). Concurrently, A.M. Best has affirmed the FSR of B+ (Good) and the Long-Term ICR of “bbb-” of Kentucky Funeral Directors Life Insurance Company (KFDLIC) (Lexington, KY), which is wholly-owned by FDLIC. The outlook of these Credit Ratings (ratings) is stable.

The ratings of FDLIC reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The negative outlook reflects the company’s ERM, which is not fully developed at this time. A.M. Best notes that FDLIC is in the process of putting a more structured risk management process into place, as well as documenting and enhancing its current risk identification and mitigation procedures. The ratings affirmations were supported by the strength of FDLIC’s balance sheet, anchored by its risk-adjusted capitalization, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Additionally, the quality of the company’s investment portfolio is relatively high and has delivered a steady stream of favorable net investment income that generally exceeds industry benchmarks.

Operating metrics reflect the company’s generally steady operating earnings, driven by somewhat modestly growing preneed premiums, with a reported return metric in line with industry peers. A.M. Best views FDLIC’s business profile as limited, due primarily to its concentration in the preneed market. While this product is generally considered as lower risk, the overall market for preneed has faced challenges related to consumer trends over the last decade.

The ratings affirmations of KFDLIC reflect its balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, very limited business profile and appropriate ERM.

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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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A.M. Best

Bruno Caron, +1 908-439-2200, ext. 5144

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Christopher Sharkey, +1 908-439-2200, ext. 5159

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Kate Steffanelli, +1 908-439-2200, ext. 5063

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Jim Peavy, +1 908-439-2200, ext. 5644

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Source: A.M. Best