OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating (FSR) to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating (ICR) to “a-” (Excellent) from “bbb+” (Good) of Multinational Life Insurance Company (Multinational Life) (Hato Rey, PR). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
These ratings reflect Multinational 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 rating upgrades reflect the strengthening of Multinational Life’s business profile. In recent years, the company has grown its more profitable core term life and cancer segments, where it continues to increase market share, while shifting away from its less profitable credit life and annuity segments. However, Multinational Life continues to operate in the highly competitive life and supplemental health insurance markets and maintains concentrations of business in term life and cancer products in Puerto Rico.
Multinational Life’s balance sheet strength assessment of strong is based on its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). This is partially offset by a surplus note comprising approximately one-fifth of absolute capital and surplus, as well as annual dividends equating to approximately half of its net income over the past five years. The company’s stable operating performance over the past two years was driven by reduced sales commission expense from lower new sales resulting from the COVID-19 pandemic market conditions, partially offset by related lower premium. AM Best expects earnings to remain favorable over the medium term based on the strength of the company’s distribution network and adoption of new innovative digital sales practices.
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