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FOR IMMEDIATE RELEASE
OLDWICK - MAY 28, 2015 10:11 AM (EDT)
A.M. Best has upgraded the financial strength rating to B++ (Good) from B+ (Good) and the issuer credit rating to "bbb" from "bbb-" of Guarantee Trust Life Insurance Company (Guarantee Trust) (Glenview, IL). The outlook for both ratings has been revised to stable from positive. Guarantee Trust is a mutual company that utilizes independent agents and brokers to provide a portfolio of health, accident, life and special risk insurance programs to individuals and families.
The rating actions reflect Guarantee Trust's sound risk-adjusted capitalization, consistent operating results and relatively conservative investment portfolio. Additionally, the upgrades recognize the material progress the company has made in strengthening its business profile in recent years. Partially offsetting these positives are Guarantee Trust's need to further diversify its distribution within its core accident and health business as well as potential adverse results from outstanding litigation.
More recently, Guarantee Trust has materially pared-down its product offerings as well as worked to revitalize its brand and strengthen its operational expertise. As a result, the company has reported favorable trends in statutory capital and surplus, growing total capital by over $23 million since year-end 2010. As such, A.M. Best believes Guarantee Trust's risk-adjusted capitalization is more than adequate to support its insurance and investment risks. The company's capital growth has been supported by consistent operating gains, driven largely by its core cancer, hospital indemnity and other supplemental health lines of business. Additionally, operating results have been supported by a steady stream of net investment income. Guarantee Trust's investment portfolio is relatively conservative and primarily consists of investment grade corporate bonds, with modest exposure to mortgage loans and asset-backed securities. A.M. Best notes that the company's exposure to higher-risk assets relative to capital and surplus has declined materially and compares favorably with similarly-rated peers.
A.M. Best notes that while more diverse than in prior years, Guarantee Trust still is exposed to potential risk associated with its dependence on key distribution relationships. Additionally, in its ordinary course of business, the company is subject to litigation, legal claims and other proceedings and has several open court cases in which it is a named defendant. A.M. Best will continue to closely monitor the potential for an adverse outcome and its impact on Guarantee Trust's operations going forward.
A.M. Best believes the ratings of Guarantee Trust are unlikely to change in the near term. Key rating factors that could result in a negative rating action include deterioration in operating results, a significant decline in risk-adjusted capital or the reporting of a materially adverse legal charge.
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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