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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 28, 2016 04:19 PM (EDT)
A.M. Best has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and the issuer credit ratings to “a-” from “bbb+” of Heartland Fidelity Insurance Company (Heartland Fidelity) (District of Columbia). The outlook for each rating was revised to stable from positive.
The ratings upgrade reflects Heartland Fidelity’s continued trend of profitable growth through increased business diversification over the past several years. Since commencing operations in 2003, Heartland Fidelity has reported favorable earnings as a result of diligent cost management controls and pricing discipline. In conjunction with this growth trend, Heartland Fidelity’s earnings have diversified as the company transferred a sizeable block of vision business from an affiliate over the past two years, resulting in vision premiums exceeding 40% of total revenues at year-end 2015. Heartland Fidelity is further strengthening its revenue stream by gradually building the membership served under Employee Group Waiver Program contract with the Centers for Medicare & Medicaid Services (CMS). In addition, consistent profitability and retention of 100% of earnings at the company since inception contributed to strong capital and surplus. The level of risk-adjusted capitalization is strong and more than sufficient to support the company’s risks.
Partially offsetting these positive rating factors is Heartland Fidelity’s growing share of high-cost specialty drugs, which may put increased pressure on earnings. However, this is in line with the industry trend. Additionally, A.M. Best is concerned about the increasing trend in premium leverage as premium growth continues to outpace capital and surplus; however, the current level of leverage is still considered strong. In addition, premium growth has been primarily driven by lower-risk vision business.
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 see A.M. Best’s Recent Rating Activity web page.
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