KBRA Affirms and Subsequently Withdraws Rating for ELCO Mutual Life and Annuity
28 Mar 2025 | New York
KBRA affirms the BBB insurance financial strength rating (IFSR) for ELCO Mutual Life and Annuity ("ELCO" or "the company"). The Outlook is Stable. Subsequently, KBRA withdraws the rating at the request of the company.
Key Credit Considerations
The rating reflects ELCO’s strong track record of organic growth in surplus and capital, supported by consistent profitability and earnings. The company’s low-risk Medicaid-compliant annuities (MCA), conservative investment portfolio, and improving asset/liability management contribute to its stable financial position, despite a year-over-year decline in risk-based capital. Additionally, ELCO’s corporate governance, enterprise risk management, and strategic planning processes have matured over time. The company’s niche strategy in the senior market, coupled with its growing portfolio of annuity and life insurance products, offers potential for long-term diversification of its premium and reserve mix.
Balancing these strengths are significant concentration risk with a key distribution partner, limited diversification in the business mix (though improving), and exposure to potential regulatory changes in the MCA space, though no changes are currently under consideration. KBRA believes that sustained growth in surplus and risk-adjusted capital would help mitigate concentration risk. Reinsurance leverage, though declining, remains elevated.
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