AM Best Downgrades Outlook for CICA Life Insurance Credit Rating

AM Best has revised its outlook on CICA Life Insurance Company of America's Long-Term Issuer Credit Rating (ICR) to negative from stable, while affirming the company's Financial Strength Rating (FSR) at B++ and Long-Term ICR at 'bbb+'.

This revision reflects pressure on CICA's balance sheet strength due to new business strain stemming from strategic growth initiatives. Despite a stable FSR outlook, the negative Long-Term ICR outlook indicates potential future challenges if operating losses continue longer than expected.

CICA's balance sheet strength remains supported by a strong level of risk-adjusted capitalization, as measured by AM Best's Capital Adequacy Ratio (BCAR). The company maintains liquidity consistent with industry norms, supplemented by Federal Home Loan Bank lending capacity and bank lines of credit. Investments are conservatively managed, primarily in investment-grade fixed income.

The company's operating performance has been under pressure in recent years due to rising underwriting expenses and statutory strain associated with new business growth, which is likely to suppress profitability in the near term but expected to stabilize as policies mature. Investment earnings have shown adequacy and consistency over the past five years.

Licensed in 43 states and the District of Columbia, CICA's market is concentrated mainly in the southern United States with a specific focus on the Hispanic demographic. Its enterprise risk management (ERM) framework is tailored to its operational scale and risk profile, with plans to enhance ERM sophistication in response to increasing operational risks.

This credit rating update highlights the dynamic interplay between CICA's growth strategies and financial stability metrics, signaling cautious monitoring for stakeholders. The company's conservative investment approach and solid capitalization provide mitigating factors amid ongoing underwriting challenges and regulatory considerations. Monitoring the evolution of ERM processes and operating results will be essential for future rating assessments.