AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of
These Credit Ratings (ratings) reflect CSO’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The stable outlooks reflect the company maintaining a very strong level of balance sheet strength through capital growth and a favorable risk-adjusted capital position. Premium growth has been on a positive trend over the past few years and the diversified portfolio of alternative investments has produced favorable returns contributing to profitable operations. This has been accomplished in an increasingly challenging operating environment within its core credit insurance product line primarily due to intense competition, unfavorable auto industry trends and regulatory changes.
CSO has maintained its credit insurance market share by expanding its geographic footprint on a national scale. AM Best also notes CSO’s re-entry into the Medicare supplement business a few years ago. These actions are expected to diversify the company’s product and earnings profile. However, AM Best views the Medicare supplement business to be highly competitive and commoditized, and CSO is not expected to be profitable on this block for a few years. The organization also recently launched a new dental, vision and hearing policy to help further diversify its senior market portfolio. Management is looking for products that could leverage the established broker network. In addition, the organization continues to seek acquisitions, alliances and investment opportunities for new blocks of business. AM Best will continue to monitor the company’s efforts to expand into debt cancellation programs in the credit union market, as well as its progress toward establishing a trend of profitable growth across its book of businesses, and more specifically in the newly entered Medicare supplement space. The profitable expansion and diversification of its revenue and earnings across its suite of products will be a key to ratings stability for the organization going forward.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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