AM Best Downgrades Credit Ratings of Members of GPM Life Group
March 28 2024 - 11:03AM
Business Wire
AM Best has downgraded the Financial Strength Rating to
B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit
Ratings to “bbb+” (Good) from “a-” (Excellent) of GPM Health and
Life Insurance Company and Government Personnel Mutual Life
Insurance Company. These companies are headquartered in San
Antonio, TX, and collectively are known as GPM Life Group. The
outlook of these Credit Ratings (ratings) has been revised to
stable from negative.
The ratings reflect GPM Life Group’s balance sheet strength,
which AM Best assesses as very strong, as well as its marginal
operating performance, neutral business profile and appropriate
enterprise risk management (ERM).
The rating downgrades reflect GPM Life Group’s key operating
performance metrics, which have weakened considerably in recent
years and have shifted ultimately toward levels more closely
aligned with carriers assessed at the marginal level as opposed to
adequate. The deterioration in the group’s operating results has
been primarily driven by new business strain, as well as mortality
experience in recent years across the ordinary life lines of
business. In 2023, underwriting results improved with targeted
production limits and reduced expenses associated with a reduction
in new business sales. However, volatility still existed, which was
partially facilitated by non-admitted asset changes.
GPM Life Group’s balance sheet strength assessment is
underpinned by its risk-adjusted capitalization, which remained at
the strongest level at fiscal year-end 2023, as measured by Best’s
Capital Adequacy Ratio (BCAR). AM Best considers the company to
have a conservative investment portfolio with high quality bonds
and a robust commercial loan program in place for yield enhancement
and diversification. Liquidity remains in line with industry
benchmarks. Partially offsetting this balance sheet position is
declining surplus levels that stem from negative earnings.
Reinsurance is used prudently to cede new business and mitigate the
overall underwriting risk level from strategic growth
initiatives.
AM Best considers GPM Life Group’s business profile to be
neutral. The company is a niche writer that focuses on federal and
military communities. The company operates lower risk ordinary life
products and has adequate diversification from both a product and
geographic perspective. Channel distribution is concentrated within
the Independent Marketing Organization channel. ERM is considered
adequate for the size and scale of operations and includes proper
governance and risk management.
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.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
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Brent DeAngelis Financial Analyst +1 908 882
1730 brent.deangelis@ambest.com
Michael Adams Associate Director +1 908 882
1592 michael.adams@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com