AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Lincoln Heritage Life Insurance Company (Lincoln Heritage) (Springfield, IL).

The Credit Ratings reflect Lincoln Heritage’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 revised outlooks for Lincoln Heritage reflect a trend of favorable operating performance observed over the past few years. Underwriting performance improved in 2022, from the company reporting a net underwriting loss in 2021, to a net underwriting gain position in 2022, with continued improvement through 2023 that more than doubled 2022’s underwriting gain. The increase was driven by a trend of normalized claims experience post-COVID. In 2023, net investment income also improved approximately 25% due to higher invested assets and higher yields available in the market. The company reported a record year for operating earnings from both a pre-tax and post-tax perspective. Lincoln Heritage’s return-on-equity ratio exceeds the industry average on both a one- and five-year basis by a significant margin. The company’s favorable operating performance in recent years has improved its capitalization on both a risk-adjusted and absolute basis.

Lincoln Heritage is a mono-line final expense writer that is licensed in 49 states and the District of Columbia. The company targets the senior market with a special focus on the Hispanic market. While the market for final expense is rather competitive due to the commodity-like nature of the product, Lincoln Heritage has a strong market position with an estimated 22% of new final expense business in 2023. Partially offsetting these positive factors are the company’s product concentration and moderate geographic concentration.

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