KBRA Places the Ratings for United Heritage Life Insurance Company and Sublimity Insurance Company on Watch Developing and the Ratings for United Heritage Property & Casualty Insurance Company on Watch Downgrade
2 Nov 2023 | New York
KBRA places on Watch Developing the A- Insurance Financial Strength Ratings (IFSR) for United Heritage Life Insurance Company (UHLIC) and Sublimity Insurance Company (SIC). KBRA places on Watch Downgrade the BBB+ IFSR for United Heritage Property & Casualty Insurance Company (UHPC).
Due to the challenging reinsurance market, severity of inflation, and poor property and casualty (P&C) performance results, United Heritage Financial Group (UHFG) has made a strategic decision to significantly reduce the P&C business written in UHPC and to move some of its exposure to SIC. UHFG utilizes UHPC to write standard homeowners, farmowners, personal auto and umbrella business in addition to specialty businesses which includes homeowners with limited perils, mobile homes, landlord protection products and small BOP. UHPC will no longer write its standard products which represent approximately $33 million in annual written premium. A portion of UHPC's business is expected to be transferred to SIC, the group’s other P&C operating company within the group where the preferred business is written and which currently writes approximately $37 million in annual written premium. UHPC will continue to write its specialty products, which account for approximately $6 million in premiums. UHFG has also identified expense synergies in its P&C business, which coupled with reducing risk exposures and volume at UHPC leads management to expect improved financial results. Lastly, the company has announced its intention to implement a new policy administration system at SIC starting in 2024. The Watch Developing status for UHLIC and SIC reflects the group's strategic decision to significantly realign and reduce risk in the P&C business written in UHPC and the uncertainty related to projected future financial results, market position and risk profile. The Watch Downgrade status for UHPC reflects continued poor operating results in the first half of 2023 which have caused a material decrease in surplus and the anticipated significant reduction in the size and scope of the company which is likely to negatively impact its earnings diversification and market position.