OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Long-Term Issuer Credit Rating to “bbb+” (Good) from “bbb” (Good) and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Gulf Guaranty Life Insurance Company (Gulf Guaranty Life) (Flowood, MS). The outlook of the Long-Term ICR has been revised to stable from positive, while the outlook of the FSR is stable.
These Credit Ratings (ratings) reflect Gulf Guaranty Life’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The upgrade of Long-Term ICR reflects the strengthening of Gulf Guaranty Life’s ERM practices. Since early 2020, the company has implemented elements of a formal ERM process including inherent and residual risks assessments, risk controls and oversight, and committee structure. Gulf Guaranty Life also implemented an ERM software application. These initiatives enhanced the company’s existing qualitative risk management by quantifying its risk exposure. Additionally, in 2020, Gulf Guaranty Life developed and implemented a formal risk appetite statement. This enhanced ERM program was demonstrated throughout 2021 by several risk-driven strategic initiatives.
Gulf Guaranty Life’s balance sheet strength assessment of strong is based on its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR); this is partially offset by a relatively low level of absolute capital and surplus, and an elevated level of higher risk 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 benefit 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 segment, as well as in the Southeast United States.
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