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

01/20/2015
LAKE FOREST, Ill. – A.M. Best has affirmed the financial strength ratings of A- (Excellent) and the 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. (TGI) and the debt rating of "bb" on $75 million floating rate trust preferred securities, due 2035 ($39 million currently outstanding), issued by Trustmark Finance Trust I. The outlook for all ratings is stable.

The ratings reflect Trustmark's successful exit from the fully insured major medical product line, trend of favorable earnings, solid risk-adjusted capitalization and diversity in product offerings. Trustmark exited the fully insured major medical product line at the end of 2014 and has successfully transitioned its small-group block of business to self-funding. Furthermore, the organization continues to expand its small-group medical stop-loss products into additional states. Trustmark has reported consistent profitability, which has allowed the organization to maintain solid risk-adjusted capitalization levels, although earnings have been partially offset by dividend payments to the parent organization. Trustmark has product diversity through its voluntary and small-group, self-funded medical insurance product offerings and through its non-insurance operations, which include benefit administration and wellness offerings.

Offsetting these positive factors is the challenging operating environment, which includes an increasing number of competitors and the pressures of the economic environment. Furthermore, the small-group, self-funded product operates with narrow margins and competition consisting of larger carriers, some of which have their own networks.

TGI's debt-to-capital ratio is approximately 12%, which is considered low, and the group maintains ample interest coverage.

A.M. Best believes that positive rating movement for Trustmark is unlikely in the near to medium term. Factors that could result in negative rating actions include adverse trends in capital and/or lack of profitable growth in its core lines of 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.

Key insurance criteria reports utilized:

  • A.M. Best's Liquidity Model for U.S. Life Insurers
  • Insurance Company Holding Company and Debt Ratings
  • Rating Members of Insurance Groups
  • Risk Management and the Rating Process for Insurance Companies
  • Understanding BCAR for U.S. and Canadian Life/Health Insurers
  • Equity Credit for Hybrid Securities

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center

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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