AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of a+ of Modern Woodmen of America (Modern Woodmen) (Rock Island, IL). The outlook of the FSR remains stable.
The Credit Ratings (ratings) reflect Modern Woodmens balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The Long-Term ICR outlook revision reflects the high proportion of the reserve profile attributable to interest sensitive annuities and universal life products, the reliance on capital gains to support net income and spread compression due to the low interest rate environment. Additionally, absolute operating earnings generally have declined in recent years and return metrics are modest. Partially offsetting these negative rating factors are the companys strong position within the fraternal industry and its favorable risk-adjusted capitalization, which is supported by a well-diversified investment portfolio that is viewed as below-average risk relative to the industry. Additionally, Modern Woodmen has been active in its efforts to lower its exposure to equities.
This press release relates to Credit Ratings that have been published on AM Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
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