A.M. Best Upgrades Financial Strength Ratings of ULLICO Inc.'s Life/Health Subsidiaries

Strategic Insights -

A.M. Best Co. has upgraded the financial strength ratings of ULLICO Inc.'s (ULLICO) life/health subsidiaries, The Union Labor Life Insurance Co. (Union Labor Life) and its wholly-owned subsidiary, ULLICO Life Insurance Co., to B (Fair) from B- (Fair). This upgrade reflects the improved financial condition of Union Labor Life, which has implemented several corrective actions to address concerns over weak capitalization, liquidity, asset concentration, and invested asset quality.

Key Takeaways:

  • A.M. Best upgraded the financial strength ratings of ULLICO Inc.'s life/health subsidiaries to B (Fair) from B- (Fair), citing improved financial condition.
  • Union Labor Life has implemented several corrective actions, including the sale of blocks of business, noncore subsidiaries, and limited partnership holdings, strengthening its balance sheet and improving liquidity.
  • The company has reported operating profits in recent quarters, but it may take time for the corrective actions to prove sustainable.
  • A.M. Best will continue to monitor Union Labor Life's ability to further reduce its less liquid riskier assets, improve capitalization, and restore a profitable growth trend in its core business segments.
  • Ulico Casualty's rating affirmation is based on continued adverse loss reserve development and reduced premium volumes, while Ulico Standard's rating affirmation is based on its maintenance of capitalization at a minimum level guaranteed by ULLICO.
  • ULLICO's capital and liquidity have improved over the past two years.

Statistics:

  • Financial strength ratings upgraded to B (Fair) from B- (Fair) for Union Labor Life and ULLICO Life Insurance Co.
  • Rating outlook revised to stable from negative for Union Labor Life.
  • Rating affirmation for Ulico Casualty with a negative outlook.
  • Rating affirmation for Ulico Standard with a negative outlook.
  • Company has reported operating profits in recent quarters.
  • Improvement in capitalization and liquidity over the past two years.

Sources:

  • A.M. Best Co. press release, June 16, 2005 (http://www.ambest.com/ratings)
  • COMTEX news service (http://www.comtexnews.com)