AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” (Good) to Continental General Insurance Company (CGIC), based in Austin, Texas. The outlook for these ratings is stable.
Key Factors Behind the Ratings
The ratings reflect CGIC’s:
- Strong Balance Sheet Strength: Backed by $4.6 billion in invested assets and $573 million in statutory capital and surplus as of Q2 2024, CGIC boasts robust risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).
- Adequate Operating Performance: Driven by favorable policy persistency, sound investment strategies, and innovative claims management practices.
- Focused Business Profile: Primarily concentrated on long-term care (LTC) products, which account for over 90% of reserves and premiums.
- Appropriate Enterprise Risk Management (ERM): Includes advanced claims technologies, third-party administrator partnerships, and investment in operational efficiency.
Strategic Developments
CGIC has steadily expanded its capital and invested assets through reinsurance agreements and acquisitions of closed blocks of LTC insurance, including the 2018 merger of Humana’s Kanawha block and a recent LTC reinsurance deal with Elevance Health in 2023. These efforts align with CGIC’s strategy to grow its presence in the senior market.
Looking forward, CGIC plans to diversify its revenue by introducing new final expense, hybrid LTC, and indexed universal life products. Additionally, the company’s affiliated third-party administrator, Continental General Services LLC, provides fee-based administrative solutions, further supporting its capital-light growth model.
Challenges and Opportunities
- Concentration Risks: The company’s heavy reliance on LTC products and geographic concentration (77% of premiums from five states) could pose challenges.
- Market Competition: As CGIC scales and diversifies, it may face execution risks in new markets.
- Investment Strategy: While its elevated allocation to public equities carries risk, it may help match long-duration liabilities.
Despite these challenges, CGIC has a well-established management team with a deep understanding of the LTC market and regulatory environment. Its recent investments in technology and operational infrastructure position the company for accelerated growth.
Outlook
The stable outlook reflects expectations that CGIC will maintain strong capitalization and adequate operating performance as it executes its growth initiatives. AM Best will continue to monitor the company’s progress in diversifying operations and managing risks.
For more information on these ratings and related disclosures, visit AM Best’s Recent Rating Activity page.
About AM Best
AM Best is a global credit rating agency and data provider specializing in the insurance industry. With offices in key markets worldwide, it offers trusted insights to help stakeholders navigate the complex insurance landscape. For further details, visit www.ambest.com.
