AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of Central States Indemnity Co. of Omaha (CSI), and its subsidiary, CSI Life Insurance Company (CSI Life). The outlook of the Credit Ratings (rating) is stable. Both companies are domiciled in Omaha, NE.
The ratings reflect CSI and CSI Life’s balance sheet strength, which AM Best assesses as strongest, as well as their adequate operating performance, limited business profile and appropriate enterprise risk management.
Additionally, CSI and CSI Life benefit from very conservative underwriting leverage, a strong liquidity position and the implicit support from their ultimate parent, Berkshire Hathaway Inc. (Berkshire) [NYSE: BRK A and BRK B]. CSI is a specialty insurance company that provides credit card credit insurance and has fronting agreements with multiple insurers.
These positive rating factors are offset by CSI’s elevated common stock leverage. CSI currently writes more non-credit insurance premiums on a gross basis compared with its long-standing credit insurance business. The vast majority of gross premiums written are related to long-term fronting arrangements that the company benefits from while bearing little of the underwriting risk.
The rating affirmations of CSI Life reflect its synergies with CSI. The ratings also reflect the strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and the explicit support provided by its parent, CSI, as well as the implicit support from its ultimate parent, Berkshire. Offsetting rating factors include CSI Life’s limited business profile and lack of product diversification.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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