AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of 'a-' (Excellent) of
The outlook assigned to the Credit Ratings (ratings) is stable.
The ratings reflect IAIC's balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The rating also factors in rating enhancement from its ultimate parent,
IAIC, formerly part of
IAIC has the strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR). The company also maintains favorable balance sheet metrics. The growth trend in absolute capital and surplus is supported by consistent operating earnings as the pet insurance business gains additional market share. Capital stability is supported by favorable underwriting results and investment gains, even after dividends to its former parent in the past years. IAIC has ample sources of liquidity, including its very liquid investment portfolio, as well as financial flexibility from its current parent,
Premium growth over the last couple of years, primarily emerging from incremental changes to short-term medical and pet insurance, has reflected company initiatives aimed at transitioning it to higher growth businesses, while adding revenue diversity and improving margins. The group has successfully implemented these changes over the last few years, and pet insurance premium is expected to be only source of revenue and earnings going forward. After exiting the medical stop-loss business several years ago, IAIC has focused on profitably growing premium as a niche market carrier in its remaining specialty health and group benefits products, making up approximately half of the total premium, which will be completely ceded to
The ERM program of IAIC is appropriate. The plan, which sets forth a strong risk culture and governance, along with ongoing discipline and risk identification, has continued to evolve over the past year, adding more sophisticated risk and contingency plans around the pet insurance business.
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