AM Best has removed from under review with developing implications and upgraded the Financial Strength Rating to B++ (Good) from B (Fair) and the Long-Term Issuer Credit Rating to “bbb” (Good) from “bb+” (Fair) of Unified Life Insurance Company (Unified Life) (headquartered in Overland Park, KS). The outlook assigned to these Credit Ratings (ratings) is stable.

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

The ratings also reflect implicit support from Unified Life’s parent company, Obra Capital, Inc. (Delaware) (Obra), which in turn, is majority owned by controlled affiliates of Aquarian Holdings LLC and Redbird Capital Partners. On Dec. 27, 2023, Unified Life became a wholly owned subsidiary of Obra Insurance Holdings LLC (Delaware), a subsidiary of Obra. Obra is an alternative asset management firm that provides investment products and solutions across insurance and credit, and one of the largest investors in life settlement longevity assets. Obra has grown its assets under management (AUM) successfully, and its investment professionals have years of experience transacting in insurance and reinsurance markets, and already manage dedicated (re)insurance capital in-house.

Obra acquired Unified Life to support a growth strategy in the life insurance and annuity markets, which if executed, will diversify Obra’s earnings and the expected returns for limited partner investors in Obra-managed funds.

Unified Life is positioned to strengthen its absolute and risk-adjusted capitalization levels over time from greater operating scale. The company’s statutory capital and surplus increased to approximately $23.1 million at year-end 2023 and $25.9 million at the end of second-quarter 2024, from roughly $19.4 million at year-end 2022 due to positive earnings and some paid-in capital. Unified Life’s statutory risk-based capital ratio was 345% at year-end 2023, higher than 279% at year-end 2022 (Company Action Level). Unified Life’s overall balance sheet strength assessment also includes net yield achieved from rotating assets to the group’s target investment portfolio, the potential for shareholder dividends, and any forthcoming external or internal retrocession strategies to companies affiliated or related to Obra. In addition, goodwill from prior acquisitions, while decreasing in recent years, comprises some portion of Unified Life’s available capital. AM Best will monitor the company’s future capitalization against planned growth initiatives.

Partially offsetting the positive factors is the company’s nominal market share in its core (re)insurance markets, and the group likely will continue to face substantial competition as it aims to execute its strategy of diversifying and growing its AUM mainly through additional inbound reinsurance. Also noted is the financial leverage at the parent companies and execution risk related to achieving current business plans.

The assigned stable outlooks reflect AM Best’s expectation that Unified Life continues to have strategic importance to Obra, and that Unified Life will maintain its adequate overall balance sheet strength assessment, supported by its strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). This strength is supported by Obra’s underwriting, investment and ERM capabilities.

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