|[February 21, 2013]
A.M. Best Upgrades Ratings of Medico Insurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has upgraded the financial strength rating (FSR) to
B++ (Good) from B+ (Good) and issuer credit rating (ICR) to "bbb" from
"bbb-" of Medico Insurance Company (Medico). The outlook for both
ratings is stable. Medico is a subsidiary of American Enterprise Group
Inc. (American Enterprise) (Des Moines, IA), which is the intermediate
holding company in the organization's mutual holding company structure.
A.M Best also has affirmed the FSR of A- (Excellent) and ICRs of "a-" of American
Republic Insurance Company (American Republic) (Des Moines, IA) and
its subsidiary, American Republic Corp Insurance Company
(American Republic Corp), as well as World Insurance Company (World)
and its subsidiary, World Corp Insurance Company (World Corp)
(collectively known as American Enterprise Group). American
Republic and World also are direct subsidiaries of American Enterprise.
The outlook for these ratings is negative. All companies are domiciled
in Omaha, NE, unless otherwise specified.
The rating upgrades reflect Medico's merger with American Enterprise
effective July 1, 2012 and its intercompany reinsurance agreement with
World, effective as of July 1, 2012. The merger will provide an expense
synergy for Medico, as well as a growth opportunity in the senior market
for American Enterprise. Medico will continue to operate as a single
entity in Nebraska under its present name and will continue to sell
Medico products through its independent agents.
The rating affirmations recognize American Enterprise Group's solid
risk-adjusted capital position and its established history of marketing
Medicare supplement products to niche markets mostly in the Midwest.
American Republic Corp and World Corp's ratings reflect the explicit
support each company receives from American Republic. This is evidenced
by the material quota share reinsurance and capital support agreements
with the two companies and American Republic. However, the
organization's exit from the individual major medical business, which
previously represented a sizable portion of total premium revenue, has
resulted in a reliance primarily on the Medicare supplement business.
While the exit from the individual major medical business significantly
reduced American Enterprise Group's exposure to regulatory and market
risks, overall, it is now more singly exposed to regulatory and market
risks associated with the Medicare supplement business, as well as
increased competition from larger, more aggressive carriers.
A return to a stable outlook could occur if American Enterprise Group
diversifies into additional business lines, which would provide it
meaningful revenue and profitability, and if there is a significant
improvement in its operating results from core lines. Factors that could
result in negative rating actions include American Enterprise Group
experiencing a significant deterioration in operating performance, a
decline in risk-adjusted capital or a diminished business profile in the
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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