A.M. Best announced Tuesday it has upgraded Hato-Rey based Universal Life Insurance Company’s financial strength rating to A- (Excellent) from B++ (Good) and the issuer credit rating to “a-” from “bbb+.” The outlook for both ratings has been revised to stable from positive.
“The upgrades reflect 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,” said A.M. Best, known as the world’s oldest and most authoritative insurance rating and information source.
“In addition, the ratings consider Universal Life’s improved interest spread, despite the low interest rate environment, and competitive advantage as a unique provider of tax advantaged annuities in Puerto Rico,” it said in its assessment of the change.
Partially offsetting the positive rating factors are Universal Life’s geographic concentration risk in an economically challenged environment and its high interest-sensitive product concentration. While the company does market variable annuities, there is minimal risk to Universal Life as benefit guarantees are reinsured, A.M. Best said.
“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 stabilized high risk-adjusted capitalization,” it said.
However, key rating factors that may result in negative rating actions include loss of support from its financially stronger parent, significant operating losses and further product concentration, it noted.
Universal Group Inc. is one of the largest insurance groups in Puerto Rico. It has operations in 17 U.S. states and offers insurance products, policy financing and investment options.