A.M. Best has removed from under review with developing
implications and affirmed the financial strength rating of A-
(Excellent) and the 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) (New York, NY) and Independence American
Insurance Company (Independence American) (New Castle, DE), all
subsidiaries of Independence Holding Company (Independence
Holding) (headquartered in Stamford, CT) [NYSE: IHC]. Concurrently, A.M.
Best has removed from under review with developing implications and
affirmed the ICR of “bbb-” of Independence Holding. The outlook assigned
to each rating is stable.
The actions follow the recent public announcement by Independence
Holding that it has completed the transaction to co-insure the in-force
stop–loss business of Standard Security and Independence American
produced by IHC Risk Solutions to Swiss Re Corporate Solutions
Ltd. The transaction proceeds were $152.5 million in cash. The
transaction benefited Independence Holding’s equity, however,
significantly weakened the organization’s business profile, as the
stop-loss business represented over 40% of premiums in 2015. Although
the remaining premium, mainly comprised of fully insured supplemental
health and disability products, is diversified geographically and by
product, A.M. Best is concerned that a lack of scale in these lines of
business may put pressure on future earnings. However, following the
stop-loss transaction, the level of absolute and risk-adjusted
capitalization at the insurance subsidiaries is expected to improve and
remain more than sufficient to support the organization’s existing
business risks and potential future growth.
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.
A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS
RESERVED.
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