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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 22, 2015 01:20 PM (EDT)
A.M. Best has upgraded the issuer credit ratings to "bb+" from "bb" and affirmed the financial strength rating of B (Fair) of the subsidiaries of USHEALTH Group, Inc.: Freedom Life Insurance Company of America (Freedom Life) and National Foundation Life Insurance Company (NFL) (referred to collectively as USHEALTH Group). The outlook for all ratings has been revised to positive from stable. All companies are domiciled in Fort Worth, TX.
The rating upgrades reflect USHEALTH Group's diversified revenue growth in Affordable Care Act (ACA) exempt supplemental health lines of business, strong operating results and improved capitalization. The company has successfully identified and reached the underserved segment of this market. USHEALTH Group remains focused on further expanding its ancillary product offerings, developing captive distribution in new geographies and maintaining long-term customer relationships as a means of increasing its scale and brand recognition in the marketplace. In addition, during 2014 and in the first quarter of 2015, the holding company significantly improved its financial flexibility through debt refinancing on more favorable terms and accelerated debt repayment. Additionally, the outlook revision to positive reflects A.M. Best's opinion that the USHEALTH Group is positioned for future profitable growth and enhanced financial flexibility.
Partially offsetting these positive rating factors is the challenge to maintain the growth in supplemental medical products. Additionally, future revenue expansion is tied to USHEALTH Group's ability to grow its captive agency force, which A.M. Best views as a significant competitive advantage. Moreover, the debt at USHEALTH Group, Inc., although substantially reduced, is still supported by operating company dividends, which may hamper capital and surplus growth at Freedom Life and NFL.
A.M. Best believes that future positive rating actions for USHEALTH Group may result from organic earnings growth, further reduction in leverage throughout the organization, continued strong operating results and growth of risk-adjusted capitalization at each of the subsidiaries. Future negative rating actions could occur due to weakened operating performance, increased financial leverage or deterioration of risk-adjusted capitalization levels.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center .
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