OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlook of the Long-Term Issuer Credit Rating (Long-Term ICR) to positive from stable and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” of Gulf Guaranty Life Insurance Company (Gulf Guaranty Life) (Jackson, MS). The outlook of the FSR is stable.
These Credit Ratings (ratings) reflect the balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
The revised Long-Term ICR outlook reflects the strengthening of Gulf Guaranty Life’s ERM practices. In early 2020, the company engaged an ERM consultant to assess its inherent and residual risks, as well as controls over these risks, and also implement an ERM software application. This initiative enhanced the company’s existing qualitative risk management by quantifying its risk exposure. Additionally, Gulf Guaranty Life developed and implemented a formal risk appetite statement. AM Best will continue to monitor further evolution of Gulf Guaranty Life’s ERM program and its role in business decisions.
Gulf Guaranty Life’s balance sheet strength assessment of strong is based on its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), partially offset by a relatively low level of absolute capital and surplus, and a high level of less liquid investments. The company’s favorable operating performance has been driven by pre-tax net operating gains owing to consistent investment income and improving underwriting experience. The company posted sizeable premium growth driven by market demand for its limited benefits medical product. While the company has shifted its business mix in recent years to more group limited benefit medical products in comparison with its credit and final expense products, it maintains a relatively modest, but growing, share of the highly competitive group limited benefit medical market. Additionally, premium is concentrated in this market, as well as in the Southeast United States.
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