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A.M. Best Upgrades Issuer Credit Rating of USIC Life Insurance Company
[January 28, 2015]

A.M. Best Upgrades Issuer Credit Rating of USIC Life Insurance Company


A.M. Best has upgraded the issuer credit rating (ICR) to "bbb+" from "bbb" and affirmed the financial strength rating (FSR) of B++ (Good) of USIC Life Insurance Company (USIC Life) (San Juan, PR). Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICR of "a+" of United Surety & Indemnity Company (USIC) (San Juan, PR). The outlook for all ratings is stable. The upgrade reflects A.M. Best's view of the growing strategic importance and risk diversification that the life company affords to its parent company, MRM Group, Inc. USIC Life has also received explicit capital support when needed. The rating action also reflects USIC Life's continued positive operating earnings, maintenance of an adequate risk-adjusted capitalization position and the group's established distribution network.

Offsetting these positive rating factors are the potential statutory surplus strain associated with growth in USIC Life's core business lines, along with modest earnings growth, the company's limited business profile and potential pressure on sales and profitability stemming from the continuing depressed economy in Puerto Rico.

The affirmation of USIC's ratings recognizes its superior capitalization, very strong operating performance over the long term (reflective of profitable underwriting) and local market expertise derived through its niche market focus.

Partially offsetting these positive rating factors are USIC's geographic risk concentration within Puerto Rico, which exposes its operations to changes within the economic, competitive and regulatory environments, and its high underwritng expense ratio.



While positive rating action is unlikely in the near term, given the upgrade, factors that could lead to further positive rating actions for USIC Life include continued growth in surplus through organic earnings, a reduction in concentration in its primary business line and further earnings diversity. Factors that could result in negative rating actions for USIC Life include deterioration in operating performance, a substantial decline in risk-adjusted capitalization or loss of support from its parent.

Factors that could result in downward pressure on USIC's ratings include significant weakening in operating earnings due to deteriorating underwriting performance, or a material increase in catastrophe losses, which weakens overall capitalization. Nevertheless, A.M. Best believes that USIC is well positioned at its current rating level. The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.


Key insurance criteria reports utilized:

• Risk Management and the Rating Process for Insurance Companies

• Understanding BCAR for U.S. and Canadian Life/Health Insurers

• Rating Members of Insurance Groups

• Catastrophe Analysis in A.M. Best Ratings

• Insurance Holding Company and Debt Ratings

• Rating Surety Companies

• Understanding BCAR for Property/Casualty Insurers

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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