Best Drops Ratings Of Household, Affiliates
A.M. Best Co. has affirmed the financial strength rating of B++ [Good] and the issuer credit ratings of “bbb+” of Household Life Insurance Company, its direct subsidiary, First Central National Life Insurance Company of New York and its property/casualty affiliate, HSBC Insurance Company of Delaware which were recently acquired by Bermuda’s Enstar Group.
The outlook for all ratings is stable. Concurrently, A.M. Best has withdrawn the ratings of all three companies in response to management’s request to no longer participate in A.M. Best’s interactive rating process.
On March 31, 2013, the Enstar Group Limited completed the acquisition of the US and Canadian closed-life insurance operations from HSBC Holdings plc. Bermuda-based Enstar specialises in acquiring and managing insurance and reinsurance companies in run off.
The HSBC companies acquired added approximately $1.4 billion in total cash and investments to Enstar’s balance sheet.
The ratings of Household Life and First Central reflect their adequate risk-adjusted capitalisation despite large stockholder dividends in recent periods and historically favorable operating results, particularly within their core credit life and accident and health lines of business. A.M. Best notes that Household Life reported substantial operating losses in 2012 due mainly to costs associated with exiting its term insurance business as well as reserve increases in this product line.
The ratings of HSBC Insurance Company recognise “its sound risk-adjusted capitalisation and historically strong underwriting and operating performance”, said Best spokesperson. In March 2013, the company received a capital contribution from its former parent that increased policyholders’ surplus from $2.1 million at year-end 2012 to over $10 million as of March 31, 2013.
