AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” (Excellent) from “a-” (Excellent) of Trustmark Insurance Company, Trustmark Life Insurance Company of New York (Albany, NY) and Trustmark Life Insurance Company (collectively referred to as Trustmark Group). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
In addition, AM Best has upgraded the Long-Term ICR to “bbb” (Good) from “bbb-” (Good) of Trustmark Group, Inc. (TGI). The outlook of the Long-Term ICR has been revised to stable from positive. Subsequently, AM Best has withdrawn the rating of TGI due to the fact that the trust preferred securities issued by TGI’s subsidiary, Trustmark Financial Trust I were paid down in 2022; therefore, there is no outstanding debt, as its obligations were satisfied, and Trustmark Group, Inc. will no longer require a Credit Rating. All companies are domiciled in Lake Forest, IL, unless otherwise specified.
The ratings reflect Trustmark Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The rating upgrades reflect Trustmark Group’s continued maintenance of the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), favorable liquidity metrics and moderate investment risks. Trustmark Group has shown incremental strengthening of its risk-adjusted capital over the last few years, driven by strong operating results and a flexible dividend policy. Trustmark Group manages each insurance entity’s statutory capital to ensure appropriate levels are maintained. Furthermore, Trustmark Group has access to additional funds from the holding company, if required. Invested assets are exposed to higher risk investments, but the portfolio is actively managed to ensure risks are maintained at a moderate level. During 2022, Trustmark Group took steps to mitigate some of its asset risk as allocations in equities, cash, short-term investments and Schedule BA were reduced and shifted into fixed income, while mortgage loans, real estate and contract loans remained at the same levels from the prior year. The mortgage portfolio is made up of just commercial loans, and there were no delinquencies or foreclosures during 2022.
Trustmark Group’s operating performance remains adequate, with voluntary benefits driving overall results. Higher claims volume has led to material margin compression on its small-group third-party administration business. The group has reported favorable premium development following a recent strategic growth opportunity in the Washington state market. During 2022, better-than-expected persistency and revenue from sales in Washington drove revenue growth. The organization divested its closed long-term care block of business to its reinsurance partner and sold its large-group third-party administrator in 2022. Prospective revenues are expected to decline due to the divestiture of these businesses, and to a lesser degree, from pricing actions in the small-group business. This decline will be offset partly by Trustmark Group’s new contract with a large federation of local unions to provide universal life insurance with long-term care coverage to their actively employed members, starting in second quarter 2023.
Trustmark Group’s business diversity reflects the wide breadth of its operating subsidiaries’ voluntary life, supplemental health and small-group stop-loss products, as well its non-insurance administrative, wellness and fitness management services. The non-insurance entities also provide the organization with additional financial flexibility through their non-regulated earnings, which contributed favorably to Trustmark Group’s earnings. As noted above, in October 2022, Trustmark Group completed the sale of Trustmark Health Benefits, Inc. to Health Care Service Corporation (HCSC). The sale proceeds are expected to be used to grow the insurance businesses. AM Best notes that Trustmark Group operates in the highly competitive voluntary benefits market, which includes many national and regional insurers, and the group remains somewhat exposed to geographic concentration risk, as more than half of its business is generated in five states.
This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230328005901/en/
Senior Financial Analyst
+1 908 439 2200, ext. 5567
+1 908 439 2200, ext. 5321
Associate Director, Public Relations
+1 908 439 2200, ext. 5159
Senior Public Relations Specialist
+1 908 439 2200, ext. 5098