AM Best revises outlooks to positive for Heartland Fidelity Insurance

OLDWICK: AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Heartland Fidelity Insurance Company, Washington D.C.

The credit ratings reflect Heartland’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The positive outlooks are based on Heartland’s improved underwriting and operating results over the past three years and projected favorable outcome in 2019. The company has exhibited consistently profitable risk revenue development over the period in its two major lines of business, pharmacy and vision care.

The company’s reliance on assumptive reinsurance for growth has flattened, and the increase in direct premiums speaks of the improvements achieved through its distribution force. The improvements in operating performance reflect double-digit return on revenue and return on equity scores that generally have grown over the past four years.

The ratings also recognize Heartland’s high risk-adjusted capitalization, which has led to its balance sheet strength assessment of strongest over the past few years. The ratings also recognize the company’s efforts to strengthen ERM by putting into place the policies, procedures and management oversight needed to solidify the organization’s risk profile.

Partially offsetting these strengths is the concentration of sales in New Jersey, and from a business profile perspective, operation remains concentrated in pharmacy and vision care. There also is a strong reliance on its Pharmacy Benefits Manager (under common ownership), without which the company’s growth and business diversification could be limited.

Edited by Kiran Khan

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