A newly formed long term Class C insurer in Bermuda has factored into the ratings of CNO Financial Group Inc and its life/health subsidiaries by AM Best.

The ratings agency has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a” (Excellent) of the life/health insurance subsidiaries of Indiana-based CNO.

Concurrently, AM Best has affirmed the long-term ICR of “bbb” (Good) and the long-term issue credit ratings of CNO.

The outlook of these credit ratings is stable.

The agency said the ratings reflect CNO’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

It added that the rating affirmations primarily reflect the stable and consistently diversified operating performance supported by favourable premium growth trends.

AM Best said: “The company’s move to improve the capital efficiency of its operating company, Bankers Life and Casualty Company, through its reinsurance with newly formed affiliate, CNO Bermuda Re, also factors into the long-term credit ratings.

“This transaction included $6.2 billion of in-force fixed index annuity statutory reserves in addition to new FIA business.

“CNO has a history of using reinsurance strategically to manage the risks on its operating companies’ balance sheets.

“CNO has a well-diversified product portfolio where its broad set of distribution channels offer a wide array of retirement, life and accident and health products.

“AM Best acknowledges that these markets are very competitive; however, CNO has carved out a competitive position through its diversified distribution and enhanced technological capabilities.

“Its recent formation of a Bermuda captive was done with an extensive look at the potential risks involved. AM Best views CNO’s risk management capabilities as appropriate, which includes stress testing scenarios and measurement of risks to identify, manage and mitigate its risks.”

AM Best said the FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed with stable outlooks for the following key life/health subsidiaries of CNO Financial Group Inc: Bankers Life and Casualty Company, Colonial Penn Life Insurance Company, Bankers Conseco Life Insurance Company, and Washington National Insurance Company.