OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long Term ICR) of “a+” of most U.S. property/casualty (P/C) subsidiaries of Assurant, Inc. (Assurant) (headquartered in New York, NY) [NYSE: AIZ]. Concurrently, AM Best has upgraded the Long-Term ICR to “a+” from “a” and affirmed the FSR of A (Excellent) of Virginia Surety Company, Inc. (Chicago, IL), a P/C subsidiary of Assurant. In addition, AM Best has affirmed the FSR of A- (Excellent) and the Long Term ICRs of “a-” of the core U.S. life/health (L/H) subsidiaries of Assurant, which comprise the organization’s current writers of domestic and foreign preneed life insurance, and U.S. and Canada-based credit life and health insurance operations. AM Best also has affirmed the Long-Term ICR of “bbb+” and the Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of Assurant. Concurrently, AM Best has downgraded the Long-Term ICRs to “bbb” from “bbb+” and affirmed the FSR of B++ (Good) of Union Security Insurance Company (USIC) (Topeka, KS) and Union Security Life Insurance Company of New York (USLICNY) (Fayetteville, NY). The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of the companies and Long- and Short-Term IRs.)
The ratings reflect Assurant’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM). The company maintains leadership positions in the delivery of lender-placed homeowners insurance, mobile protection insurance, vehicle service contracts, extended service contracts and credit-related insurance products, and maintains a large customer base through its large number of distribution sources in North America. The group’s diversified product and distribution platforms, along with its technology focus, has delivered strong earnings over the past five years despite periods of significant catastrophe losses.
Somewhat offsetting these positive ratings factors are the P/C group’s natural catastrophe exposure and its continued dependence on third-party reinsurance. These factors expose the P/C group’s earnings to a degree of variability. However, these concerns are mitigated somewhat by its geographic spread of risk, management’s use of risk management tools — including tracking aggregation of risks — and product design.
The ratings of USIC and USLICNY reflect their balance sheet strength, which AM Best categorizes as strong, as well as their adequate operating performance, very limited business profile and appropriate ERM. The Long-Term ICR downgrade reflects the forward lack of progression toward a growth plan. Although profitable, the majority of the remaining business is in runoff and the company lacks a tangible long-term premium growth plan.
Assurant’s domestic and Canada-based preneed companies, American Memorial Life Insurance Company (American Memorial) (Rapid City, SD) and Assurant Life of Canada (ALOC) (Toronto, Canada), are the main entities of Assurant’s Global Preneed business segment. The ratings of American Memorial reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its strong operating performance, favorable business profile and appropriate ERM. Assurant’s preneed business adds a source of diversification to the greater Assurant enterprise and a solid profitable business with double-digit return-on-equity measures. There is some concentration risk because of a reliance on a primary distribution channel; however, this relationship appears to be on firm ground. COVID-19 did impact sales for Assurant’s preneed business, although Assurant did not experience a significant increase in mortality during the first few months of the pandemic.
The ratings of ALOC reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its strong operating performance, neutral business profile and appropriate ERM. ALOC is the leading writer in Canada’s preneed market and maintains good geographic diversity within Canada’s provinces.
The ratings of Assurant’s credit L/H insurance companies — American Bankers Life Assurance Company of Florida (Miami, FL) and Caribbean American Life Assurance Company (San Juan, PR) — reflect their balance sheet strength, which AM Best categorizes as strong, as well as their strong operating performance, limited business profile and appropriate ERM. The credit insurance business adds a broad range of diversified product premium for Assurant, and geographically, growth in its Canadian credit business has been favorable.
The FSR of A (Excellent) and the Long-Term ICRs of “a+” have been affirmed with stable outlooks for the following P/C subsidiaries of Assurant, Inc.:
- American Bankers Insurance Company of Florida
- American Security Insurance Company
- Standard Guaranty Insurance Company
- Caribbean American Property Insurance Company
- Voyager Indemnity Insurance Company
- Reliable Lloyds Insurance Company
The Long-Term ICR has been upgraded to “a+” from “a” and the FSR of A (Excellent) has been affirmed with stable outlooks for Virginia Surety Company, Inc., a P/C subsidiary of Assurant, Inc.
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have been affirmed with stable outlooks for the following L/H subsidiaries of Assurant, Inc.:
- American Memorial Life Insurance Company
- American Bankers Life Assurance Company of Florida
- Caribbean American Life Assurance Company
- Assurant Life of Canada
The Long-Term ICR has been downgraded to “bbb” from “bbb+” and the FSR of B++ (Good) affirmed with stable outlooks, for the following L/H subsidiaries of Assurant, Inc.:
- Union Security Insurance Company
- Union Security Life Insurance Company of New York
The following Long-Term IRs have been affirmed with stable outlooks:
Assurant, Inc.—
-- “bbb+” on USD 300 million 4.90% senior unsecured bonds, due 2028
-- “bbb+” on USD 300 million floating senior unsecured bonds, due 2021 (USD 50 million outstanding)
-- “bbb+” on USD 300 million 4.20% senior unsecured bonds, due 2023
-- “bbb+” on USD 350 million 4.00% senior unsecured bonds, due 2023
-- “bbb+” on USD 350 million 3.70% senior unsecured bonds, due 2030
-- “bbb+” on USD 475 million 6.75% senior unsecured bonds, due 2034 (USD 275 million outstanding)
-- “bbb” on USD 400 million 7.00% subordinated bonds, due 2048
-- “bbb-” on USD 288 million 6.50% preferred securities, converting to common in 2021
The following Short-Term IR has been affirmed:
Assurant, Inc.—
-- AMB-1 on commercial paper
The following indicative Long-Term IRs on securities available under the shelf registration have been affirmed with stable outlooks:
Assurant, Inc.—
-- “bbb+” on senior unsecured
-- “bbb” on subordinated debt
-- “bbb-” on preferred stock
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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