|[February 07, 2013]
A.M. Best Revises Issuer Credit Rating Outlook to Negative for Standard Life & Casualty Insurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has revised the issuer credit rating (ICR) outlook
to negative from stable and affirmed the financial strength rating (FSR)
of B (Fair) and ICR of "bb+" of Standard Life & Casualty Insurance
Company (Standard Life) (Salt Lake City, UT). The outlook for the
FSR is stable.
The revised outlook for the ICR reflects Standard Life's fluctuation in
its modest absolute capital and surplus levels, the challenges and
uncertainties associated with changing its strategic direction and its
increased financial leverage. In late 2011, Standard Life announced its
exit from the individual major medical market, its largest line of
business. This action was in response to the challenges in the
competitive and regulatory environment resulting from health care reform
legislation. As such, this may pose challenges and uncertainties in the
company's strategic ability to replace the loss of revenue.
Additionally, Standard Life has taken on significant leverage to acquire
assets in late 2011 and 2012, which will require permanent financig.
This will further inhibit any future investments as the company
leverages its balance sheet with additional debt.
The ratings reflect Standard Life's improving capital levels and more
favorable operating results in 2012. Additionally, the company has an
established distribution network that includes solid relationships with
independent marketing organizations and brokers, which contract with
captive and semi-captive agents.
Standard Life's ICR outlook could return to stable if the company
successfully executes its business strategy by generating manageable,
sustainable premium revenue and favorable underwriting experience in
some of its newer product lines, reduces its debt leverage and grows
absolute and risk-adjusted capital. Alternatively, negative rating
actions could occur if the company's earnings trend declines or it
incurs a material depletion in its risk-adjusted capital and surplus,
incurs additional debt leverage or impairs assets.
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.
Founded in 1899, 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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