Two days after ratings agency A.M. Best downgraded its ratings, National Life Insurance Company announced its operational results for the first six months ended June 30, reporting $4.5 million in net revenue.
NALIC reported $2.4 million in revenue for the second quarter ending on the same date, representing the second consecutive reporting period showing positive results, company officials said.
“This substantial improvement in NALIC’s operations is the result of a strategy to improve financial execution, operating performance and capitalization of the company, which included new reinsurance structures, lower operating expenses and a significant improvement in cost structure,” said NALIC CEO Edgardo Van Rhyn.
This is the first time since May that there is something positive to result related ot the insurance company, which has been under the Puerto Rico Insurance Commissioner’s supervision due to its fiscal problems. Earlier this week, A.M. Best Co. has downgraded National Life Insurance Company’s ratings, this time to C++ (Marginal) from B- (Fair) and issuer credit rating to “b” from “bb-.”
In a statement, A.M. Best acknowledged that since being under court-ordered supervision, NALIC’s management had taken steps toward improving its financial condition, such as implementing various quota-share agreements, decreasing administrative expenses and establishing a strategic plans for capital enhancements.
However, A.M. Best noted its concern over the cross-ownership issues NALIC has with subsidiary National Insurance Company.
“This last year has been of change for the company. The results of these two consecutive quarters with sustained earnings evidences the successful implementation of these measures, including the elimination process of our interaction with NIC as a shareholder,” Van Rhyn said. “This transformation is part of a trend that will allow NALIC to further strengthen its capital and high liquidity [as it works] toward [becoming a] more efficient and profitable company.”
As of June 30, NALIC had a portfolio of cash and investments of some $93 million. It also signed up about $39 million in premiums during the first half of 2011. NALIC’s capital increased by 23 percent to $ 15.1 million as of June 30, compared with what was reported as of December 31, 2010, the company informed.