A.M. Best has assigned a Financial Strength Rating (FSR) of A (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of a to Renaissance Life & Health Insurance Company of New York (RLHINY) (Binghamton, NY). The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of a of Renaissance Life & Health Insurance Company of America (RLHICA) (Indianapolis, IN). The outlook of these ratings is stable.
The ratings reflect RLHICA and RLHINYs balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the support of its majority owner, Delta Dental Plan of Michigan, Inc. (DDMI).
The assigned ratings for RLHINY reflect the financial support the entity has received and the strategic importance of the entity to the group. RLHINYs New York operations are key to the organizations business development strategy in the Mid-Atlantic region. Operations in New York are being integrated fully into overall operations and management, and are necessary for regional pricing flexibility. Through the recent reinsurance and acquisition agreements with Security Mutual Insurance Company, Renaissance has added to its suite of ancillary products offered in New York. The additional product offerings combined with its dental insurance and administrative services are expected to expand Renaissances operations into new markets and with additional premium.
Furthermore, the ratings of the Renaissance entities reflect a steady trend of premium growth, which has a five-year compound annual growth rate of 19%. In addition, the entities have been consistently profitable, although earnings trended downward in 2017 and into the first half of 2018, driven by the reinsurance agreement, premium growth and increased administrative expenses related to expansion. The ratings also reflect the strength and implicit support of the majority owner, DDMI.
An offsetting rating factor includes the execution risk of the expansion strategy, as the organization moves from primarily a dental insurance writer, and begins to expand into others product offerings and geographic markets. This has placed some strain on earnings, which are significantly lower but remain profitable.
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