A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B++ (Good) and issuer credit rating of "bbb+" of Universal Life Insurance Company (Universal Life) (Hato Rey, PR).
The revised outlook reflects Universal Life's well-established marketing presence and brand name recognition in the Puerto Rico insurance marketplace, the financial commitment of its parent, Universal Group, Inc., its strong level of risk-adjusted capitalization, as well as its positive operating earnings trends and consistent premium growth. In addition, the ratings consider Universal Life's improved interest spread, despite the low interest rate environment, and strong market presence as a well known provider of tax advantaged annuities in Puerto Rico.
Partially offsetting these positive rating factors is Universal Life's geographic concentration risk in an economically challenged Puerto Rico market and its high interest sensitive product concentration. While the company does market variable annuities, there is minimal risk to Universal Life as any benefit guarantees are reinsured.
Key rating factors that may result in positive rating actions include improvement in Universal Life's operating results in its ancillary lines of business, the decrease in its product concentration and maintenance of high risk-adjusted capitalization. Key rating factors that may result in negative rating actions include loss of support from its financially stronger parent, erosion of capital, significant operating losses and further product concentration.
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 ambest.com/ratings/methodology.
A.M. Best Company is an insurance rating and information source.
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