A.M. Best Upgrades Ratings of CNO Financial Group, Inc. and Its Life/Health Subsidiaries
August 26 2015 - 11:35AM
Business Wire
A.M. Best has upgraded the financial strength rating
(FSR) to A- (Excellent) from B++ (Good) and the issuer credit
ratings (ICR) to “a-” from “bbb+” for the life/health subsidiaries
of CNO Financial Group, Inc. (CNO Financial) (Carmel, IN)
[NYSE: CNO]. Concurrently, A.M. Best also has upgraded the ICR and
existing senior issue ratings to “bbb-” from “bb+” of CNO
Financial. The outlook for all ratings has been revised to stable
from positive. (See below for a detailed listing of the companies
and ratings.)
The ratings upgrades reflect the continuing growth trends in CNO
Financial’s risk-adjusted capitalization and favorable operating
earnings. In addition, A.M. Best acknowledges the company’s
execution of its strategic business plan, which included
exiting/de-emphasizing non-core product lines through divestiture
and reinsurance, as well as a recapitalization of its debt
structure. CNO Financial’s favorable operating results have been
attributable to the growth in revenue in its life/health insurance
subsidiaries, as well as its ongoing expense management. Continued
earnings and lower dividend obligations have resulted in improved
risk-adjusted capitalization for the insurance operating companies.
A.M. Best notes that Bankers Life and Casualty Company
(Bankers Life) (Chicago, IL), the group’s lead operating entity,
has seen considerable improvement in its risk-adjusted
capitalization in recent years.
CNO Financial’s adjusted financial leverage ratio increased to
approximately 20% as a net result of the recent completion of its
recapitalization plan. Despite the modest increase in leverage,
A.M. Best notes that the company’s financial leverage and interest
coverage ratios remain well within A.M. Best’s guidelines for its
current ratings.
While CNO Financial’s annuity and life insurance sales have
generally increased, A.M. Best continues to observe a decline in
new business premium trends within some of its core lines of
business, including Bankers Life’s Medicare supplement and
long-term care (LTC) product lines. A.M. Best notes that the
decline in LTC premium is largely a function of the continuation of
an overall market shift to short-term care products, in addition to
offering reduced benefits, including the elimination of lifetime
benefits, for newly issued long-term care policies. However, the
premium decrease in Bankers Life’s other health products is
partially attributable to the lack of agent growth. While agent
productivity continues to improve, agent headcount has recently
become stagnant. A.M. Best notes that growth in annuity premiums,
which is primarily driven by indexed annuities, has been able to
mostly offset the decrease in health sales during the first half of
the year.
Factors that could result in favorable rating actions for CNO
Financial and its life/health operating companies over the near to
medium term include continued diversification in business mix
driven by sustained, profitable premium growth trends. Factors that
could lead to negative rating actions include significant
deterioration in risk-adjusted capitalization, material and
sustained reserve strengthening within its LTC block of business
and/or sizable operating or realized losses.
The FSRs have been upgraded to A- (Excellent) from of B++ (Good)
and the ICRs have been upgraded to “a-” from “bbb+” for the
following key life/health subsidiaries of CNO Financial Group,
Inc.:
- Bankers Life and Casualty
Company
- Colonial Penn Life Insurance
Company
- Bankers Conseco Life Insurance
Company
- Washington National Insurance
Company
The following issue ratings have been upgraded:
CNO Financial Group, Inc.—
-- to “bbb-” from “bb+” on $325 million 4.50%
senior unsecured notes, due 2020
-- to “bbb-” from “bb+” on $500 million 5.25%
senior unsecured notes, due 2025
This press release relates to rating(s) 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 visit A.M.
Best’s Ratings & Criteria Center.
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 © 2015 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20150826005882/en/
A.M. BestTom Zitelli, 908-439-2200, ext.
5412Senior Financial
Analysttom.zitelli@ambest.comorTom Rosendale,
908-439-2200, ext. 5201Assistant Vice
Presidentthomas.rosendale@ambest.comorChristopher
Sharkey, 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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