A.M. Best has affirmed the Financial Strength Rating (FSR)of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a-"of American Republic InsuranceCo. (American Republic) (Des Moines, IA), its subsidiaries,American Republic Corp. InsuranceCo. (Des Moines, IA), and MedicoCorp. Life Insurance Co. (Des Moines, IA), and its sister company,Medico Insurance Co.(Des Moines, IA). American Republic and Medico Insurance Company are directsubsidiaries of American Enterprise Group, Inc. (American Enterprise), which isan intermediate holding company in the organization's mutual holding companystructure. The outlook of these Credit Ratings (ratings) is stable.Concurrently, A.M. Best has assigned an FSR of A- (Excellent) and a Long-TermICR of "a-" to Medico Life and Health Insurance Company (MLHIC) (DesMoines, IA), a subsidiary of American Enterprise. The outlook assigned to theseCredit Ratings (ratings) is stable.
American Enterprise's rating affirmations reflect theorganization's strong balance sheet that includes its more-than-adequaterisk-adjusted capital position and its well-managed investment portfolio. Thecompany's statutory operating profitability has benefited from AmericanEnterprise's growth in net premiums written over the past few years and hasbeen bolstered by a steady stream of net investment income. However, A.M. Bestnotes that profitability has been dampened by strain related to commissions andother expenses in recent years. As of Dec. 31, 2016, the company reportedfavorable revenue growth with its core Medicare supplement businessrepresenting roughly 60% of new sales. A.M. Best would like to see theorganization achieve further business diversification while maintaining itsfavorable level of risk-adjusted capital and notes that the market for Medicaresupplement remains very competitive and subject to potential regulatorypressures.
The ratings of MLHIC reflect its strategic importance to theAmerican Enterprise organization as a writer of Medicare supplement coverage.All of MLHIC's business is ceded to its sister company, American Republic. Theorganization as a whole continues to expand its distribution through its careerand independent agents, as well as its strategic partnerships within the healthinsurance marketplace. Additionally, American Enterprise continues to focus ondiversification of its product mix, offering a new suite of dental productsalong with supplemental health products and final expense insurance.