A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Madison National Life Insurance Company, Inc. (Madison National) (Madison, WI), Standard Security Life Insurance Company of New York (Standard Security) and Independence American Insurance Company (Independence American) (New Castle, DE). Concurrently, A.M. Best has affirmed the ICR of “bbb-” of the parent company, Independence Holding Company (Independence Holding) (headquartered in Stamford, CT) [NYSE: IHC]. The outlook for all ratings is stable.
The ratings reflect the group’s established position in employer stop-loss, consistent profitability and improved capitalization at the operating companies. Independence Holding continues to execute its strategic business plan, which entails improving organizational effectiveness by eliminating underperforming distributors and consolidating affiliated managing general underwriters. Another facet of the group’s niche strategy is to selectively expand its product portfolio, emphasizing lines that are expected to be only marginally impacted by the Patient Protection and Affordable Care Act (PPACA). Recent offerings include critical illness, mini-medical, hospital indemnity and new limited benefits and pet insurance from Independence American.
The ratings also reflect the steady operating earnings provided by Independence Holding’s insurance entities, facilitated by strong relationships with various partners across its lines of business. Within the organization, earnings continue to improve driven by increased medical stop-loss sales and conservative underwriting, which has resulted in low loss ratios. A.M. Best notes that the insurance subsidiaries within Independence Holding have been placing increasing emphasis on business written through controlled distribution. These efforts have enabled Madison National, Standard Security and Independence American to generate more consistent operating results and enhance the organization’s capital position. Moreover, the insurers’ investment portfolios have benefitted from notable de-risking, where certain securities were divested in favor of greater quality assets while maintaining a high degree of liquidity.