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AM Best Downgrades Credit Ratings of Merit Life Insurance Company; Maintains Under Review with Developing Implications Status

AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” (Good) from “a-” (Excellent) of Merit Life Insurance Company (Merit) (Charlotte, NC). Concurrently, AM Best has maintained the under review with developing implications status on these Credit Ratings (ratings).

The ratings of Merit reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect a downward revision of Merit’s balance sheet strength assessment to strong from very strong, driven by a material decline in Merit’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), driven by a significant decline in statutory surplus. The decline in statutory surplus is due in part to a reduction in invested assets as the company has been using asset sales to cover operating expenses. The parent company has not provided any capital injection since fall 2023 as it is currently seeking to sell Merit to an unrelated third party.

AM Best will continue to closely monitor the transaction and the impact, if any, on Merit’s ratings. The ratings will remain under review with developing implications pending completion of the sale and until AM Best can complete its assessment of post-transaction rating fundamentals.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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