AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to CICA Life Insurance Company of America (CICA). CICA is headquartered in Austin, TX. The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect CICA’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 (ERM).
The very strong balance sheet strength assessment reflects the company’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), on a pro forma basis with parental backing from the publicly traded parent, Citizens, Inc. [NYSE: CIA]. AM Best expects CICA’s risk-adjusted capitalization to remain at the strongest level; however, BCAR is projected to decline modestly primarily due to statutory expense strain from increasing new business sales and infrastructure investments to support future growth plans.
CICA has a low dependence on reinsurance as most new business is retained by the company. The company also has access to capital via Federal Home Loan Bank lending, various lines of credit, as well as parental liquidity and capital markets channels.
Partially offsetting these factors is CICA’s limited business profile, which reflects execution risk pertaining to the business growth plan being pursued. The company has expanded nationally yet premium concentration exists among the top five states where it writes business. While AM Best expects significant premium growth in the coming years, CICA’s bottom-line performance on a statutory basis is projected to be negative until it can achieve scale and earnings generated from in-force business are able to offset new business strain.
The stable outlooks reflect AM Best’s expectation that over the intermediate term, the company will maintain a very strong balance sheet strength assessment, supported by additional initiatives that will further leverage the parent company’s ERM framework. AM Best will continue to monitor CICA’s progress in executing its business plan as well as its impact on operating performance and surplus.