A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of "bbb-" of Order Of United Commercial Travelers Of America (UCT) (Columbus, OH).
The revised outlooks reflect a decline in premiums written, negatively trending net income and modestly declining surplus through the nine-month period ending Sept. 30, 2017. A.M. Best also notes that the company maintains an overall small absolute level of capital, which together with its limited financial flexibility and lack of diversification has the potential to magnify the impact of unfavorable operating trends on risk-adjusted capitalization.
The ratings affirmation reflects UCT's currently favorable level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), in support of its insurance and investment risks due to a conservative investment portfolio and the extensive use of reinsurance with strong counterparties. A.M. Best also notes that UCT has recently been expanding its dental, vision and hearing line of business as its previous primary product line, Medicare Supplement, becomes a smaller proportion of written premiums. In addition, although the company has made some strategic business shifts in products and distribution, the full impact on future performance is uncertain.
Source: A.M. Best Ratings Services, Inc. Used under license.