AM Best has assigned a Financial Strength Rating of A- (Excellent) and Long-Term Issuer Credit Rating of “a-” to Coefficient Insurance Company.
The outlook assigned to these ratings is stable.
Verily is the life sciences and healthcare subsidiary of Alphabet, the parent of Google.
AM Best says its ratings reflect Coefficient’s balance sheet strength, which it categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings also consider the company’s strategic importance to and the support it receives from Verily and Alphabet, and is anticipated to receive from its expected minority shareholder, Swiss Re.
The partnership with Swiss Re will bring established capabilities to Coefficient, and AM Best expects this relationship to foster strength in distribution and bring innovative solutions to the broad national market.
AM Best notes the deep experience of the team assembled to manage Coefficient, with prior leadership roles and strong knowledge of the health care and health insurance landscape.
They have also brought in experienced service support to administer and aid in executing upon their plan to grow and expand group stop-loss business for companies with self-funded health insurance employer plans.
As Coefficient increases sales volume, AM Best expects Coefficient’s risk-adjusted capital levels to decline with premium expansion, and Verily is expected to explicitly support this growth as needed with capital to maintain Coefficient’s assessed risk-adjusted capital level of strong.
Concurrently, Coefficient is expected to face challenges from market pressure and barriers may prevent expansion.
In addition to the economic challenges and social constraints during the pandemic, insurers may be faced with regulatory pressure, difficulty achieving market acceptance and changing demographics, affecting market behaviors.
AM Best says it will continue to monitor Coefficient’s ability to adapt and respond to any of these changes and their ability to respond without operational or financial disruption.
