A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a” of Centurion Life Insurance Company (Centurion Life). The outlook for both ratings is negative. In addition, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of “a-” of Centurion Casualty Company (Centurion Casualty) (both domiciled in Des Moines, IA). The outlook for these ratings is stable. Concurrently, A.M. Best has withdrawn both companies’ ratings as management has requested to no longer participate in A.M. Best’s interactive rating process. Centurion Life and Centurion Casualty are owned by Wells Fargo Financial, Inc. (WFFI), which is ultimately owned by Wells Fargo & Company (WFC) [NYSE: WFC].
The affirmation of the ratings for Centurion Life reflects its continued strong risk-adjusted capital position and consistently positive statutory operating earnings, while the negative outlook reflects its diminished business profile. The company’s core credit insurance lines of business have been placed in run off since 2010, when Centurion Life’s main distribution channel, WFFI, discontinued its consumer lending operations. Also in 2010, Centurion Life stopped issuing single premium deferred annuities due to spread compression issues.
Centurion Casualty’s ratings acknowledge its excellent risk-adjusted capitalization and consistently profitable operating results. Partially offsetting these positive rating factors is that the majority of the company’s business, including its dominant involuntary unemployment insurance, is currently in run off due to WFFI—its main distribution channel—having discontinued its consumer lending activities. Nevertheless, the stable outlook is based on A.M. Best’s expectations that the company will continue to report profitable, albeit significantly lower, operating earnings over the medium term and will maintain its excellent capitalization.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Evaluating Non-Insurance Ultimate Parents”; “Rating Members of Insurance Groups”; and “Understanding BCAR for Property/Casualty Insurers.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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