OLDWICK, N.J. – A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings of “a-” of Trustmark Insurance Company (Trustmark), Trustmark Life Insurance Company (Trustmark Life) (both of Lake Forest, IL) and Trustmark Life Insurance Company of New York (Trustmark Life NY) (Albany, NY). Concurrently, A.M. Best has affirmed the ICR of “bbb-” of the holding company, Trustmark Group, Inc. (Trustmark, Inc.) and the debt rating of “bb” on $75 million of trust preferred securities issued by Trustmark Finance Trust I. The outlook for all ratings is stable.
.The rating affirmations reflect the organization’s favorable operating results, solid risk-adjusted capitalization and the overall diversity of its insurance offerings. Additionally, Trustmark has continued to report good premium growth and profitability in its core voluntary benefits segment, particularly in a challenging economic environment. A.M. Best believes Trustmark is better positioned to have its core businesses’ revenue growth outpace revenue from non-core or divested segments.
While A.M. Best believes health care reform will not have a near term material impact on Trustmark Life’s group major medical business, longer term, it will likely pose numerous challenges. However, the Trustmark organization as a whole is much less reliant on group major medical business for revenue and operating earnings than in the past and is exploring a number of alternatives for 2014. Historically, the group major medical market always has been volatile and has become increasingly difficult on a state and national regulatory basis. In recent years, Trustmark has made a conscious effort to grow its non-insurance risk segments, such as third party administrative services through its CoreSource division. In February 2010, the organization acquired Health Fitness Corporation (HFC) to use as a platform for its consumer health advice services.
Trustmark, Inc.’s debt-to-capital ratio increased from 10% to 15% as a result of increased borrowing to help fund the acquisition of HFC earlier in the year. However, the organization continues to maintain a low debt-to-capital ratio and ample interest coverage on its debt.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Rating Members of Insurance Groups”; “BCAR for Life and Health Insurers”; and “Rating Health Insurance Companies.” Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com