The rating upgrades reflect LICOA’s established niche market in its supplemental accident and health/life insurance segment, consistent earnings trends, robust risk-adjusted capitalization and improvement in its historically elevated risk profile.
LICOA is a small, closely held public company that offers supplemental insurance products to employer groups and individuals. In recent years, the company has reported consistently favorable operating results, despite some one-time items and unfavorable results in its unlimited cancer block of business.
The earnings have continued to bolster the company’s risk-adjusted capitalization, which remains strong as measured by Best’s Capital Adequacy Ratio (BCAR).
Offsetting rating factors include LICOA’s flat premium revenue in recent years due to policyholder conversions from higher premium unlimited cancer policies to lower premium limited cancer policies, lower sales driven by local economic conditions and a mandatory one-year premium rate freeze in 2012 on parts of its cancer block. In addition, the company has business concentrations in the cancer insurance market and in four southeastern states.
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.
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