A.M. Best has upgraded the financial strength rating to A-
(Excellent) from B++ (Good) and the issuer credit rating to "a-" from
"bbb" of United Heritage Property & Casualty Company (UHPC).
In addition, A.M. Best has affirmed the FSRs of A- (Excellent) and the
ICRs of "a-" of UHPC's property/casualty affiliates, Sublimity
Insurance Company (Sublimity, OR) and Merced Property & Casualty
Insurance Company (Atwater, CA), as well as its life affiliate, United
Heritage Life Insurance Company (UHLIC). The outlook for all ratings
is stable. All companies are domiciled in Meridian, ID, unless otherwise
The rating upgrades for UHPC recognize the implicit and explicit support
provided by its parent, United Heritage Financial Group, Inc. (UHFG),
which has infused capital into UHPC several times over the past 10 years
in order for it to maintain an adequate level of risk-adjusted
capitalization relative to the premium writings and other financial
risks. UHPC also benefits from numerous shared services including, but
not limited to, investments, treasury, financial reporting, information
technology, human resources, legal, regulatory compliance and specific
actuarial functions. In addition, the ratings and outlook for UHPC
cotinue to reflect its adequate risk-adjusted capitalization,
historically favorable operating performance, conservative investment
philosophy and long-term agency relationships.
These positive rating factors are partially offset by UHPC's geographic
concentration and exposure to weather-related events as observed in 2013
when underwriting results fell below historical levels. Also, over the
past several years, substantial premium growth has caused a gradual
increase in underwriting leverage measures.
The rating affirmations for UHLIC acknowledge its adequate risk-adjusted
capitalization, overall positive operating performance, diverse business
profile and increasing ordinary life premium growth trends. Partially
offsetting these strengths are UHLIC's high guaranteed crediting rates
on the majority of its annuity business and related spread compression
risk, asset-liability duration mismatching risk and the challenges to
sustain and improve its overall operating performance while growing the
A.M. Best expects that UHFG will remain committed to maintaining an
appropriate level of capital to support UHPC's growth initiatives going
forward. However, negative rating actions may occur if net premium
growth exceeds A.M. Best's expectations and/or significant deterioration
in operating results or risk-adjusted capitalization were to occur.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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