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

04/01/2016
A.M. Best has affirmed the financial strength ratings of A- (Excellent) and the issuer credit ratings 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 (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 issue rating of “bb” on $75 million floating rate trust preferred securities, due 2035 ($39.9 million currently outstanding), issued by Trustmark Finance Trust I. The outlook for each of these ratings is stable.

The ratings reflect Trustmark’s successful exit from the fully insured group medical line of business, trend of operating profitability, robust risk-adjusted capitalization and diverse business profile. Trustmark exited the fully insured medical line of business in 2014. The organization subsequently transitioned the majority of its former small group medical business to administrative service only business administered by affiliate, Star Marketing and Administration, Inc., with Trustmark Life providing medical stop-loss coverage. The organization continues to report relatively consistent operating gains, which have enabled it to maintain favorable risk-adjusted capitalization levels, although earnings have been partially offset by dividend payments to the parent organization. Trustmark’s business diversity reflects its voluntary life and supplemental health products and its medical stop-loss products, as well as its non-insurance administrative and wellness/health management services.

The organization, however, faces the challenges of a highly competitive voluntary benefits market, which includes several national carriers across its various lines of business. Additionally, the medical stop-loss market is competitive, with carriers increasingly seeking new business among smaller employer groups.

TGI’s debt-to-capital ratio is approximately 10%, which is regarded as low, and the group maintains more-than-adequate interest coverage.

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 see A.M. Best’s Recent Rating Activity web page.

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