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FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 21, 2017 02:01 PM (EST)
A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of The Order of United Commercial Travelers of America (UCT) (Columbus, OH).
The revised outlooks reflect a decline in premiums written, negatively trending net income and modestly declining surplus through the nine-month period ending Sept. 30, 2017. A.M. Best also notes that the company maintains an overall small absolute level of capital, which together with its limited financial flexibility and lack of diversification has the potential to magnify the impact of unfavorable operating trends on risk-adjusted capitalization.
The ratings affirmation reflects UCT’s currently favorable level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), in support of its insurance and investment risks due to a conservative investment portfolio and the extensive use of reinsurance with strong counterparties. A.M. Best also notes that UCT has recently been expanding its dental, vision and hearing line of business as its previous primary product line, Medicare Supplement, becomes a smaller proportion of written premiums. In addition, although the company has made some strategic business shifts in products and distribution, the full impact on future performance is uncertain.
Partially offsetting these positive rating factors are UCT’s ongoing trend of declining direct premium, its limited business profile focused on two accident & health product lines and a still emerging formal enterprise risk management framework. A.M. Best also notes the company’s modest market positions in a highly competitive accident & health segment in which many of its competitors enjoy significant scale advantages.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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