KBRA Affirms Insurance Financial Strength Rating of Universal Life Insurance Company
5 Dec 2025 | New York
KBRA affirms the BBB insurance financial strength rating of Universal Life Insurance Company (ULICO). The outlook for the rating is stable. ULICO is an insurance operating entity of Universal Group, Inc., a holding company offering both non-life and life insurance as well as other related services in Puerto Rico.
Key Credit Considerations
The rating reflects the organization’s strong market presence, experienced management team and unique product capabilities offered to residents of Puerto Rico. ULICO is the largest life and annuity writer domiciled in Puerto Rico and offers other services to support customers. Its market position is driven by a well-established distribution network, which includes agents, banks and broker-dealers. ULICO has generated consistent favorable operating results over the last five years, which has led to a strong risk-adjusted capital position. As part of the Universal Group, ULICO files an Own Risk Solvency Assessment (ORSA) and has employees dedicated to Enterprise Risk Management.
Balancing these strengths is geographic and product concentration, with ULICO only offering business in Puerto Rico. ULICO is focused predominantly on individual annuities, notably fixed and equity indexed offerings, which generates spread income. As a result, ULICO is vulnerable to margin compression should interest rates change, although this is partially mitigated by allowances in its reinsurance treaties. ULICO also has elevated exposure to below investment grade bond holdings and other high-risk assets, which largely relates to funds withheld assets related to one reinsurance treaty.
To support growth, ULICO is reliant on reinsurance and maintains contracts with nine reinsurers. This leaves ULICO exposed to counterparty risk. ULICO has been involved in legal proceedings with one counterparty related to a closed block of fixed annuity business. While the company received some proceeds from an asset sale in September and a full resolution is expected within the next year, there is a risk that ULICO will be unable to recapture business related to this reinsurance treaty.
Rating Sensitivities
Factors that could positively impact the rating include consistent track record of internal capital generation that more than offsets stockholder dividends, material favorable change in risk profile, performance that materially exceeds forecasts provided to KBRA, or diversification of quality reinsurance counterparties.
Factors that could negatively impact the rating include material unfavorable change in risk profile, including a loss of market position and scale, material underperformance relative to forecasts provided to KBRA, unfavorable trends in operating profitability or a material decline in risk-adjusted capitalization as well as the inability to resolve the outstanding reinsurance counterparty dispute which could impact future earnings.
To access ratings and relevant documents, click here.