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TMCNet:  A.M. Best Upgrades Issuer Credit Rating of The Chesapeake Life Insurance Company

[August 08, 2018]

A.M. Best Upgrades Issuer Credit Rating of The Chesapeake Life Insurance Company

A.M. Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to "bbb+" from "bbb" and affirmed the Financial Strength Rating of B++ (Good) of The Chesapeake Life Insurance Company (Chesapeake) (Oklahoma City, OK), the core insurance subsidiary of HealthMarkets, Inc. (HealthMarkets) (headquartered in North Richland Hills, TX). Additionally, A.M. Best has upgraded the Long-Term ICR to "bb+" from "bb" of HealthMarkets. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Chesapeake's balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

The rating upgrades reflect Chesapeake's risk-adjusted capital being at the strongest level, as measured by Best's Capital Adequacy Ratio, continued favorable operating results generating capital growth and its role as the sole writer of new insurance premium for HealthMarkets. The growth of HealthMarkets Insurance Agency, Inc., Chesapeake's affiliated company and distribution channel, combined with the growth of third-party agency distribution, has resulted in Chesapeake's continued premium growth in recent years. In addition, Chesapeake's supplemental insurance portfolio branded as SureBridge has a diverse suite of supplemental health products and the organization previously exited products regulated by the Patient Protection and Affordable Care Act.

While a sizable portion of Chesapeake's business is generated y HealthMarkets Insurance Agency, Inc., the amount of business produced by third-party distributors continues to increase. In addition, Chesapeake's level of cash and short-term investments represent approximately one-quarter of invested assets, which drives liquidity measures but suppressed investment yields. Furthermore, A.M. Best notes that HealthMarkets' unadjusted financial leverage remains elevated.

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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