AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Lumico Life Insurance Company (Jefferson City, MO) and Lumico Life Insurance Company of New York (Armonk, NY). The outlook of these Credit Ratings (ratings) is stable. Together, these two companies are referred to as Lumico Life, and are indirect subsidiaries of Swiss Re Ltd (Swiss Re). AM Best has also affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of Elips Life Insurance Company (elipsLife) (headquartered in Schaumburg, IL). The outlook of these ratings is stable. elipsLife is also an indirect subsidiary of Swiss Re.
Lumico Life’s ratings reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile, very strong enterprise risk management (ERM), as well as the significant rating enhancement it receives from Swiss Re. AM Best expects the Swiss Re group to continue to provide reinsurance and capital support when and if required.
Lumico Life’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), continues to be assessed at the strongest level as of year-end 2020, benefiting from its relatively conservative short-term investment portfolio for immediate liquidity needs and from very strong internal reinsurance support provided by the Swiss Re group, although the absolute level of capital remains modest. There are no formal financial guarantees extended to Lumico Life from Swiss Re, but the ultimate parent has made previous capital infusions into the company to support increased expenses and underwriting enhancements.
AM Best expects protection products to drive Lumico Life’s premium growth, with the primary initial focus on simplified level term life insurance and Medicare supplement products, which are sold by a variety of distribution partners leveraging different sales channels. The company continues to build reserves and align appropriate assets to cover its liabilities. Overall product design and pricing stands to benefit from Swiss Re's extensive data and underwriting expertise. Lumico Life maintains a limited market position as it continues to grow, and has not yet reached the break-even point in terms of earnings, but is expected to do so in the near future.
elipsLife’s ratings reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile, very strong ERM and the significant rating enhancement it receives from Swiss Re. As with Lumico Life, AM Best expects the Swiss Re group to continue to provide reinsurance and capital support when and if required.
Toward the end of 2020, Swiss Re implemented a change in strategy for elipsLife, placing its group life and health business into run-off. elipsLife will eventually be integrated into iptiQAmericas business, becoming a key player supporting a growth strategy and is also expected to begin underwriting new Medicare supplement business in mid-2021. AM Best expects elipsLife to continue to benefit from a significant reinsurance agreement with Swiss Re. Another capital infusion was made by Swiss Re in 2020 to further support elipsLife’s business run-off costs and volatile market conditions.
Despite its limited business profile, elipsLife’s ratings reflect AM Best’s expectation that the company will execute on its business plan to become the primary writer of Medicare supplement insurance in support of Lumico Life’s retail initiative, while continuing to benefit from Swiss Re’s support. AM Best will monitor elipsLife’s progress in the near future to ensure that targeted results are realized.
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Senior Financial Analyst
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