OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings to “a” from “a-” of National Guardian Life Insurance Company (NGLIC) (Madison, WI) and its subsidiaries, Settlers Life Insurance Company (Madison, WI) and Commercial Travelers Life Insurance Company (Commercial Travelers) (Utica, NY). Collectively, these companies are referred to as NGL Insurance Group (or the group). In addition, AM Best has upgraded the Long-Term Issue Credit Rating to “bbb+” from “bbb” on the $47 million, 6.45% surplus notes, due 2035, issued by NGLIC. The outlook of these Credit Ratings (ratings) has been revised to stable from positive. Concurrently, AM Best has withdrawn the ratings of Settlers Life Insurance Company as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect NGL Insurance Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The rating upgrades are driven by continuing improvements in the group’s balance sheet, including a decline in financial leverage from the pay-down of surplus notes, favorable capital and surplus growth on an absolute and risk-adjusted basis, and a conservative investment portfolio. AM Best notes that operating earnings remained consistent in 2020 despite the challenges of operating in a pandemic environment.
NGL Insurance Group continues to produce adequate operating results, primarily driven by individual and group preneed business and further supported by single premium immediate annuity sales. Under the recent strategy change involving NGLIC and Commercial Travelers offering group dental and vision coverages, the group also has begun selling and retaining more of that business, contributing to improved product diversification. AM Best expects the group to maintain sufficient operating results with lower interest expenses and ongoing earnings contributions from its existing core lines of business, more than offsetting initial losses from its dental and vision initiatives. Partially offsetting these positive rating factors are the high degree of competition NGL Insurance Group faces from other organizations in the senior market, and execution risks associated with significantly growing its presence in the highly competitive dental and vision spaces, which is dominated by larger carriers.
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