Oxford Life Insurance Company Faces Negative Outlook from AM Best

Author: Dominic Sanders Updated: 09-13-2024 12:13 PM

Oxford Life Insurance Company Outlook Change

AM Best has recently taken a significant step regarding Oxford Life Insurance Company by revising the outlook from stable to negative. This change encompasses both Oxford Life and its subsidiary, Christian Fidelity Life Insurance Company. Collectively known as Oxford Group, these companies play a crucial role within the insurance landscape.

Current Ratings and Financial Strength

Despite the outlook alteration, AM Best has affirmed the Financial Strength Rating of A (Excellent) along with the Long-Term Issuer Credit Ratings of 'a' (Excellent) for Oxford Life. These ratings highlight the group’s very strong balance sheet strength, adequate operating performance, neutral business profile, and effective enterprise risk management strategies.

Reasons Behind the Negative Outlook

The main drivers for the negative outlook center on some internal control deficiencies that surfaced during Oxford Life's latest statutory audit. These issues related to financial reporting and general ledger account reconciliations. However, it is important to note that AM Best believes these shortcomings have been adequately remedied by management. Nonetheless, the real test will come during the 2024 audit, which is projected for completion in mid-2025.

Operating Performance Insights

Despite these challenges, the operating performance of Oxford Life is expected to remain stable, despite anticipating a modest statutory loss in the current year. The group’s focus on maintaining a robust operation is evident as they navigate their financial landscape.

Products and Services Offered

Oxford Life Insurance Company provides a diverse array of insurance products. As a multistate, multiline insurance group, they offer multiyear guaranteed annuities, fixed annuities, final expense plans, and Medicare supplement products. The financial foundation of Oxford Group is significantly underscored by a strong balance sheet, consistently enhanced by surplus growth.

Growth and Earnings

The increase in premium growth is notably attributed to the surge in sales of individual annuity products, specifically the multiyear guaranteed annuity. The company has reported a history of profitability, which predominantly comes from steady net investment income and promising earnings in its annuity products and Medicare supplements sector.

About the Parent Company

Oxford Group is under the umbrella of U-Haul Holding Company, known by its stock ticker NYSE: UHAL. This connection to U-Haul, a leader in the do-it-yourself household moving industry and self-storage services, adds another layer of stability to its operations. U-Haul represents a well-established brand with a wide market reach.

AM Best’s Role and Purpose

AM Best serves as an integral player in credit ratings for insurance companies worldwide. Their assessments deliver valuable insights that help consumers and investors make informed decisions about insurance companies’ financial health. With a global presence in more than 100 countries, AM Best is pivotal for shaping industry standards and ensuring transparency.

Frequently Asked Questions

What does the negative outlook from AM Best mean?

A negative outlook generally indicates an anticipated deterioration in a company's financial health or performance, necessitating closer monitoring.

How does Oxford Life's financial strength get assessed?

AM Best evaluates financial strength through a series of criteria, focusing on balance sheet stability, operational performance, and risk management practices.

Are there any upcoming audits that will impact ratings?

Yes, a significant audit is expected in 2024, which will assess whether management has successfully remediated the previous shortcomings.

What types of insurance products does Oxford Life offer?

Oxford Life provides multiyear guaranteed annuities, fixed annuities, final expense products, and Medicare supplements.

How does U-Haul Holding Company relate to Oxford Life?

U-Haul Holding Company is the parent entity of Oxford Life Insurance Company, positively influencing its operational stability and market position.

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