The ratings reflect CISL’s adequate risk-adjusted capitalization and strong operating performance. CISL offers consumer protection insurance that is sold in conjunction with its affiliated company’s installment plan.

CISL’s adequate risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is due to its moderate underwriting leverage, high-quality capital and favorable liquidity position. The company also has a good performance track record, with an average operating ratio of approximately 62% on a five-year basis. Claims experience has been favorable and stable, which is typical of the types of loan and card repayment insurance contracts that CISL writes.

Offsetting rating factors include modest capital size, a small in-force portfolio and constrained capital growth. In view of its relatively low earnings retention, the growth of premium revenue potentially could outpace the growth of capital, as measured by the company’s premium-to-capital ratio, resulting in higher underwriting leverage.

Positive rating actions are unlikely in the short to medium term. Negative rating actions may occur if CISL’s local regulatory solvency margin falls below the company’s target due to a high dividend payout, or if the company fails to maintain its strong operating performance. In addition, significant deterioration in its ultimate parent’s credit profile due to excessive leverage or shock from adverse macroeconomic events also could result in negative rating actions.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

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