AM Best Affirms Credit Ratings of Independence Holding Company and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a-" for the subsidiaries of Independence Holding Company (collectively referred to as Independence Holding Company Group or the group) (headquartered in Stamford, CT) IHC. (See below for a detailed list of companies.) Concurrently, AM Best has affirmed the Long-Term ICR of "bbb-" of Independence Holding Company. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Independence Holding Company Group's balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The group continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio. The group also maintains favorable balance sheet metrics, including its liquidity measures at both the operating and holding company. Capital stability has been supported by favorable underwriting results and investment gains, even after dividends and other capital management initiatives. The group also has a moderate dependence on reinsurance in managing its capital.

Premium growth over the last couple of years, primarily emerging from incremental changes to New York's Paid Family Leave program, short-term medical and pet insurance, has reflected company initiatives aimed at transitioning it to higher growth businesses, while adding revenue diversity and improving margins. The group has successfully implemented these changes over the last few years. The group has also reported consistent underwriting aggregate net income, despite some fluctuations at the product level, and produced favorable results across its diverse set of business.

After exiting the medical stop-loss business and divesting from the life and annuity business several years ago, the group has focused on profitably growing premium as a niche market carrier in its remaining specialty health and group benefits products. These include short-term medical, hospital indemnity, NY Disability Benefits Law and Paid Family Leave, short-term and long-term disability, pet insurance, group life, group limited benefit medical & GAP, dental and vision, as well as other products. Competition in the supplemental health and group benefits markets remains highly elevated, which may somewhat hinder the group's growth in these markets. In addition, AM Best believes the uncertain regulatory and legislative environments could negatively impact some of the group's specialty health lines of business, such as short-term medical.

The ERM program of Independence Holding Company Group remains appropriate. The plan, which sets forth a strong risk culture and governance and ongoing discipline and risk identification, has continued to evolve over the past year, adding more sophisticated risk and contingency plans.

The FSR of A- (Excellent) and the Long-Term ICRs of "a-" have been affirmed for the following members of the Independence Holding Company Group:

• Independence American Insurance Company
• Madison National Life Insurance Company, Inc.
• Standard Security Life Insurance Company of New York

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 media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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