A.M. Best Affirms Ratings of Trustmark Group, Inc. and Its Subsidiaries

01/07/2014

LAKE FOREST, Ill. – A.M. Best Co. has affirmed the financial strength ratings of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Trustmark Insurance Company, Trustmark Life Insurance Company (Trustmark Life) (both domiciled in Lake Forest, IL) and Trustmark Life Insurance Company of New York (Trustmark Life NY) (Albany, NY) (collectively referred to as Trustmark).

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 floating rate trust preferred securities due 2035 (with $39 million outstanding) issued by Trustmark Finance Trust I. The outlook for all ratings is stable.

The rating affirmations reflect the organization’s overall diversity in its insurance offerings, its continued profitable financial results and favorable risk-adjusted capitalization. Additionally, Trustmark continues to report strong premium growth and profitability in its core voluntary benefits segment, despite a challenging competitive and economic environment. Trustmark is positioning itself for revenue growth in its core lines of business to replace the revenue from non-core or divested segments.

Trustmark Life continues to have a fair amount of risk related to in-force business within the group health market, primarily group major medical business. However, Trustmark Life no longer sells group fully insured employer medical and is transitioning small groups to self-funding, as well as expanding into other states. However, the stop-loss business continues to be very challenging with narrow margins and competition consisting of larger companies. As the Trustmark organization moves through the transition, it has become less reliant on group major medical business for revenue and operating earnings.

In recent years, Trustmark has made a conscious effort to grow its non-insurance businesses, such as third party administrative services through its CoreSource division, as well as Health Fitness Corporation, which serves as a platform for its wellness and population health management services and to enhance marketing capabilities.

Trustmark, Inc.’s debt-to-capital ratio is approximately 12%, which is considered low, and it maintains ample interest coverage.

Trustmark’s ratings are well positioned at the current level. Factors that could result in negative rating actions include adverse trends in capital, growth of its voluntary line of products below A.M. Best’s expectations or its inability to profitably grow its small group stop-loss business.

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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best Co.
Jeffrey Lane, 908-439-2200, ext. 5567
Managing Senior Financial Analyst
jeffrey.lane@ambest.com
or
Sally Rosen, 908-439-2200, ext. 5280
Managing Senior Financial Analyst
sally.rosen@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com