AM Best Downgrades Credit Ratings of Mountain Life Insurance Company

AM Best has downgraded the Financial Strength Rating (FSR) to B (Fair) from B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb+” (Fair) from “bbb-” (Good) of Mountain Life Insurance Company (Mountain Life) (Lexington, KY). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Mountain Life’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, very limited business profile and appropriate enterprise risk management.

Driving the downgrade of the ratings is the deterioration of Mountain Life’s balance sheet and the lack of production in business, as well as the deterioration in creditworthiness at the ultimate parent. Mountain Life’s absolute capital levels have continued to decrease due to excess claims, shrinking an already modest capital base. Although risk-adjusted capitalization remains within the strongest category, as measured by Best’s Capital Adequacy Ratio (BCAR), the low amount of absolute capital exposes the company to sharper swings in risk-adjusted capital levels. At the parent company level, losses from the property/casualty affiliate have eaten away at the organization’s equity base. The ultimate parent’s decline in balance sheet metrics reflect the declining creditworthiness of the organization in general. At Mountain Life, there has been a lack of production in new business for some time as the company has been going through a transition period. While new business is being put on the books, it is extremely moderate compared with the amount of business in force.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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