A.M. Best Co. has affirmed the financial strength rating of A (Excellent) for Co-operators Life Insurance Co.

The rating agency says the rating reflects the company’s profitable operations, consistent surplus growth, favorable capitalization and premium growth in group insurance.

Partially offsetting these strengths, however, are the challenges to improve profitability in group insurance operations and increase individual life market share.

Co-operators Life’s profitability has been primarily driven by its individual life business as well as consistent contributions from the credit union business. The ratings agency notes that despite the presence of shareholder dividend payments in recent years, profitability has contributed to consistent surplus growth.

A.M. best says that although Co-operators Life has reported significant premium growth in group insurance business in recent years, it has been challenged to improve the profitability of this segment. In 2000, the company initiated a planned reduction in new sales of group insurance products as well as several other management initiatives, including early intervention programs in group disability as well as renewal rating actions.

According to the ratings agency, these initiatives are expected to position this segment for a return to profitability. Although Co-operators Life operates as a niche player in the individual life business, the company may be challenged to increase market share given the industry consolidation occurring in this sector, however, the company has significant opportunities for cross-selling within the Co-operators Group of companies.