A.M. Best Downgrades Ratings of Assurant, Inc.’s Health Insurance Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has downgraded the financial strength rating to B++ (Good) from A- (Excellent) and the issuer credit ratings to “bbb+” from “a-” of the health insurance subsidiaries of Assurant, Inc. (Assurant) (headquartered in New York, NY) [NYSE: AIZ], Time Insurance Company and John Alden Life Insurance Company (collectively referred to as Assurant Health and domiciled in Milwaukee, WI). The outlook for the ratings is stable.

The actions follow Assurant’s recent announcement that it is exploring strategic alternatives for its health and employee benefits business segments, including a potential sale. Absent a sale of the health operations, Assurant plans to substantially complete its exit from the health insurance market in 2016. A.M. Best’s ratings on Assurant’s other subsidiaries, including its employee benefits companies (also known as AEB), remain unchanged.

Over the last several quarters, Assurant Health has reported higher-than-anticipated claims in certain blocks of business, which has been driving significant operating losses in the segment. Results have been affected by a significant regulatory change that took effect in late 2013, after rates on metallic plans were filed and approved, allowing policyholders to keep their plans (known as grandmothering). This ultimately impacted the profitability of metallic plans by altering the level of morbidity risk in the market versus what was priced for. Additionally, the segment’s net results for 2014 were adversely impacted by unintended consequences of the executive compensation rule, 162(m), due to the overall structure of the Assurant organization. The subpar operating performance coupled with the lack of future strategic importance to the enterprise were the main factors in A.M. Best’s decision to downgrade Assurant Health’s ratings to its stand-alone credit profile.

Assurant Health’s ratings reflect its focused management team and sound capital position, which has historically benefited from sizable cash infusions from Assurant to maintain its targeted level of risk-adjusted capitalization. Moreover, A.M. Best believes that Assurant will continue to support its obligations to customers and policyholders during the process.

Over the near to medium term, A.M. Best will monitor the sales process for Assurant Health and AEB and potentially revisit the ratings if a transaction is announced.

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:

• Rating Members of Insurance Groups
• Understanding BCAR for U.S. and Canadian Life/Health Insurers

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.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best
Michael Adams, 908-439-2200, ext. 5133
Senior Financial Analyst
[email protected]
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Andrew Edelsberg, 908-439-2200, ext. 5182
Vice President
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best

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