AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” of Landmark Life Insurance Company (Brownwood, TX). The outlook of the Credit Ratings (ratings) is stable. Concurrently, AM Best has withdrawn the ratings at the request of the company to no longer participate in AM Best’s interactive rating process.
The ratings reflect Landmark Life’s balance sheet strength, which AM Best assesses as strong, as well as the company’s marginal operating performance, limited business profile and marginal enterprise risk management.
Landmark Life’s capital and surplus growth has been mostly positive in recent years, except for a slight decline in 2020 due to net losses resulting from an increase in mortality claims stemming from the pandemic. AM Best views Landmark Life’s financial flexibility as relatively weak given the company's small size and its limited access to financial markets. In addition, the company’s high dependence on reinsurance remains elevated compared with industry averages. However, the company's risk-adjusted capitalization, historically at a very strong level as measured by Best’s Capital Adequacy Ratio (BCAR), along with its conservative investment portfolio, will help mitigate the impact of any investment impairments or earnings volatility as a result of the pandemic. AM Best expects the company will maintain its risk-adjusted capitalization at least at the very strong level, as measured by BCAR, over the intermediate term.
Landmark Life historically has experienced modest profitability that has generally declined over the last few years due to investments in infrastructure and the aforementioned increase in mortality claims over the past year. Premium growth has been relatively steady with a noticeable increase in life insurance premiums over the past year. The majority of the company's business is sold as final expense, which AM Best considers to be a product of low to medium risk; however the market is becoming increasingly competitive. This product line is sold primarily through independent brokers and agents. AM Best notes that the company also generates a significant amount of its revenue from its third-party administration platform, which it expects to become an increasing source of revenue and earnings going forward.
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