AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Ratings to “bbb+” (Good) from “a-” (Excellent) of GPM Health and Life Insurance Company and Government Personnel Mutual Life Insurance Company. These companies are headquartered in San Antonio, TX, and collectively are known as GPM Life Group. The outlook of these Credit Ratings (ratings) has been revised to stable from negative.

The ratings reflect GPM Life Group’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect GPM Life Group’s key operating performance metrics, which have weakened considerably in recent years and have shifted ultimately toward levels more closely aligned with carriers assessed at the marginal level as opposed to adequate. The deterioration in the group’s operating results has been primarily driven by new business strain, as well as mortality experience in recent years across the ordinary life lines of business. In 2023, underwriting results improved with targeted production limits and reduced expenses associated with a reduction in new business sales. However, volatility still existed, which was partially facilitated by non-admitted asset changes.

GPM Life Group’s balance sheet strength assessment is underpinned by its risk-adjusted capitalization, which remained at the strongest level at fiscal year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best considers the company to have a conservative investment portfolio with high quality bonds and a robust commercial loan program in place for yield enhancement and diversification. Liquidity remains in line with industry benchmarks. Partially offsetting this balance sheet position is declining surplus levels that stem from negative earnings. Reinsurance is used prudently to cede new business and mitigate the overall underwriting risk level from strategic growth initiatives.

AM Best considers GPM Life Group’s business profile to be neutral. The company is a niche writer that focuses on federal and military communities. The company operates lower risk ordinary life products and has adequate diversification from both a product and geographic perspective. Channel distribution is concentrated within the Independent Marketing Organization channel. ERM is considered adequate for the size and scale of operations and includes proper governance and risk management.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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