Best s Rating Report

Transcription

1 Miami, Florida A- Ultimate Parent: BMI Financial Group, Inc. BEST MERIDIAN INSURANCE COMPANY 8950 S.W. 74th Court, 24th Floor Miami, FL Web: Tel: Fax: AMB#: NAIC#: Ultimate Parent#: FEIN#: BEST S CREDIT RATING Best s Financial Strength Rating: A- Best s Financial Size Category: VII Outlook: Stable RATING RATIONALE Rating Rationale: The ratings of Best Meridian Insurance Company (BMIC) reflect the company s well-established marketing presence and cultural knowledge of Latin American countries, its trend of profitable operating results and its strong risk-adjusted capitalization. Partially offsetting these strengths are higher than average mortgage loan exposure, recent volatility in statutory earnings and challenges inherent in the Latin American and Asian markets from an economic and political standpoint. BMIC continues to focus on providing individual life and health insurance products to the affluent segments of the Latin American marketplace, including Costa Rica, Guatemala and other markets, such as Taiwan. The organization s core ordinary life segment, mainly its universal life business combined with the health products, has experienced steady premium growth through the recent year-end. BMIC s marketing presence in Latin American countries is well positioned on a competitive basis as only a limited number of insurers serve these countries and only a few Caribbean insurance companies have recently entered this market. Management s knowledge of the culture and Printed April 19, Page 1 of 5

2 business strategies relative to the embedded risks within life and health insurance in Latin American countries and BMIC s name recognition are its key competitive advantages to support long-term profitable growth. BMIC is focused on financial discipline and has built operations to support profitable growth and to provide services to its policyholders as they access care both in local countries and in the US. While underwriting results have been close to breakeven over the years, investment income became a major contributor to BMIC s positive financial performance. BMIC s strong level of risk-adjusted capitalization is partially attributed to reported profitability over the past five years. While BMIC s statutory operating results remained positive, underwriting results were negative in the recent year-end due to higher medical trend and spikes in mortality and morbidity associated with certain Latin American markets. The increased medical claims were relatively broad based and not associated with any particular geography. A.M. Best believes that strategic changes BMIC has implemented should help contain increased utilization in the medium term. Furthermore, geographic expansion exposes the company to challenges from a lack of uniformity in regulatory environment. In addition, political and economic instability in the regions where the company operates can lead to a disruption in business from the affected area. However, this expansion allows the company to offer a national platform with products suitable to its customer base. Over the last several years, BMIC has continued to maintain higher exposure to mortgage loans that are secured by quality properties. However, the company has a conservative approach with thorough evaluation and underwriting guidelines for each loan. A.M. Best will continue to monitor the mortgage loan exposure going forward. Negative rating movement could occur if there is increased concentration in mortgages and real estate holdings, a significant decline in riskadjusted capitalization and substantial operating losses. RATING UNIT MEMBERS Best Meridian Insurance Company (AMB# ): Best s AMB# Company FSR Best Meridian Intl Ins Co SPC A- KEY FINANCIAL INDICATORS ($000) Total Capital Capital Asset Net Net Surplus Valuation Premiums Invest Net Year Assets Funds Reserve Written Income Income ,219 45,865 1, ,508 10,216 7, ,454 47,935 2, ,804 9,502 6, ,814 52,967 2, ,877 9,609 7, ,246 60,794 2, ,647 10,828 8, ,192 56,538 3, ,210 10, (*) Data reflected within all tables of this report has been compiled from the companyfiled statutory statement. BUSINESS PROFILE Best Meridian Insurance Company (BMIC), a U.S.-based stock company located in Miami, FL, and Best Meridian International Insurance Company SPC (BMIIC), an offshore insurance company located in Grand Cayman, Cayman Islands, are wholly owned subsidiaries of BMI Financial Group, Inc., an insurance holding company also located in Miami, FL. BMIC markets ordinary life insurance as well as individual and group accident and health products with the majority of health products being major medical insurance. Included in the company s life product portfolio are universal life, individual term and whole life policies. The majority of individual life premium is universal life. The company utilizes the services of UnitedHealthcare as a third-party administrator (TPA) for accident and health claims. UnitedHealthcare administers all health claims that are incurred by BMIC s customers in the continental United States. BMIC benefits from the UnitedHealthcare claims underwriting experience and the pricing leverage within its network of providers. BMIC also benefits from not being subject to U.S. Health regulations (specifically, minimum medical loss ratio requirements) because its customers are not U.S. citizens. BMIC markets its insurance products to business executives and professionals primarily in Latin America. These products, all written in U.S. dollars, are modeled after domestic insurance policies. This market niche has been developed and further enhanced by BMIC s senior executives, who have diversified domestic and international insurance backgrounds. The current sales force has been built primarily through referrals. All policies are printed in both English and Spanish, and all employees who are required to interact with the field force and customer base are bilingual. Printed April 19, Page 2 of 5

3 The Latin American market for private medical insurance has growth potential. As such, BMIC has been expanding its business in its current markets and expanding into new countries. BMIC has reported favorable premium development over the past few years. Business Men s Insurance Corp. is an international sales agency dedicated to serving Latin America s business community. The company has over 25 years of experience and is a leading provider of life and health insurance in Latin America, and generates virtually all of BMIC s life and health business. BMI Services, Inc. is a TPA for active life insurers (and leading international reinsurers) in Latin America, including the BMI companies and their joint ventures. This service company provides new business underwriting, policy issue and services, billing and collection, and systems support. Territory: The company is licensed in Florida. The company also insures Foreign Nationals in Latin America, the Caribbean and Asia. OPERATING PERFORMANCE Operating Results: BMIC has reported positive statutory net results over the past five years. However, net income declined substantially during 2016 following higher medical loss ratio and increased mortality for life block. The negative trends were broad-based and not tied to any particular country or event. The company has implemented rate increases to bring results to profitability, and expects financial metrics to improve throughout In addition, solid investment income contributed favorably to the overall earnings. Increased volatility in the Latin American markets, where BMIC has a considerable presence, could challenge the company s operating results. BMIC plans to continue to monitor persistency and experience by country and by agency, in order to maintain profitability within pricing assumptions. BMIC operates in several Latin American countries while it continues to increase its insurance operations in other geographical markets, such as Costa Rica, Taiwan, Nicaragua and Guatemala. Net premiums in its ordinary life line have generally demonstrated growth driven mainly by its universal life product. The majority of the company s business consists of accident and health premiums, which has increased due to increased assumption of non-affiliated reinsurance. BMIC has reported premium growth based on organic enrollment gains in majority of its markets and also due to premium rate increases. BALANCE SHEET STRENGTH Capitalization: BMIC has maintained more than adequate level of risk- adjusted capitalization over the past five years. The company s absolute level of capital and surplus position has increased steadily prior to 2016 over the past five years, primarily due to retained earnings. However, during 2016 the combination of declined net income and $4 million dividend to the holding company resulted in lower capital and surplus. BMIC s access to external capital resources remains limited. As a result, there is limited margin for any significant adverse earnings performance. As the BMI group continues to focus on expansion, access to capital might become more of an issue. With internally generated earnings as the main source of surplus growth, A.M. Best believes the group may be challenged to generate the capital necessary to further expand its Latin American operations, although the capital is more than adequate to support the business currently and in the medium term. BMIC s conservative investment philosophy and profile, combined with its stable liability structure, provide good liquidity and an adequate level of capital to liabilities. The company paid stockholder dividends for the first time in the last ten years in 2013 and again in Investments: BMIC s investment portfolio contains predominantly investment grade bonds as well as cash, other short-term investments, real estate and a mortgage portfolio. BMIC has minimal investments in equity. Invested assets have increased by almost half over the latest five year period, benefiting from the company s steadily increasing premium and surplus growth. The asset base is liquid, with investment grade bonds accounting for over half of invested assets. The company s investment strategy is to meet liquidity and cash flow needs, while maintaining yield spread, safety of investments, and providing adequate total returns. Real estate investments make up an increasing amount of the company s invested assets, consisting mainly of offices occupied by the company plus other property added recently. In 2011, the company began to invest in mortgage loans secured by quality properties to obtain higher yields with a shorter term. The company continues to maintain their conservative nature with thorough evaluation and underwriting guidelines for each loan. BMIC has aggressively added to the mortgage portfolio over the past few years with a concentration in Florida; its growth has increased to over 10% of invested assets. MANAGEMENT Officers: Chairman of the Board, Antonio M. Sierra; Vice Chairman of the Board, Brent Bush; President and Chief Executive Officer, Anthony F. Sierra; Vice President, Treasurer and Chief Financial Officer, Printed April 19, Page 3 of 5

4 Manuel Pelati; Vice President and Actuary, Michael W. Morgan; Vice President, Karen M. Michell; Secretary, Andrew Sierra; Medical Director, Rene J. Gomez; General Counsel, Carlos M. Machado. Directors: Brent Bush, Carlos Garcia-Velez, Rosario Portuondo Duncan, Anthony F. Sierra, Antonio M. Sierra. Balance Sheet Assets ($000) YE 2016 Total bonds $146,503 Total common stocks ,147 Mortgage loans ,866 Real estate ,043 Contract loans ,297 Cash & short-term invest ,127 Prems and consids due ,593 Recvble from affiliates ,308 Accrued invest income ,800 Other assets ,507 Assets $317,192 Liabilities ($000) Net policy reserves $228,853 Policy claims ,632 Deposit type contracts Interest maint reserve ,640 Comm taxes expenses ,962 Asset val reserve ,047 Other liabilities ,080 Total Liabilities $260,653 Common stock Paid in & contrib surpl ,650 Unassigned surplus ,138 Total $317,192 Printed April 19, Page 4 of 5

5 Why is this Best s Rating Report important to you? The A.M. Best Company is the oldest, most experienced rating agency in the world and has been reporting on the financial condition of insurance companies since policy, contract or any other financial obligation issued by an insurer, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser. A Best s Financial Strength Rating (FSR) is an independent opinion of an insurer s financial strength and ability to meet its ongoing insurance policy and contract obligations. An FSR is not assigned to specific insurance policies or contracts and does not address any other risk, including, but not limited to, an insurer s claims-payment policies or procedures; the ability of the insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder. An FSR is not a recommendation to purchase, hold or terminate any insurance The company information appearing in this pamphlet is an extract from the complete AMB Credit Report. You may obtain the complete report by contacting Customer Service at +1(908) or customer_service@ambest.com. Please reference the company s identification number (AMB#) listed on this rating report. For the latest Best s Financial Strength Ratings along with their definitions and A.M. Best s Terms of Use, please visit Copyright 2017 A.M. Best Company, Inc. and/or its affiliates. All rights reserved. No part of this report may be reproduced, distributed, or stored in a database or retrieval system, or transmitted in any form or by any means without the prior written permission of the A.M. Best Company. While the data in this report was obtained from sources believed to be reliable, its accuracy is not guaranteed. Printed April 19, Page 5 of 5