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A.M. Best Affirms Ratings of Americo Life, Inc. and Its Subsidiaries
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| Copyright: | Business Wire | | Source: | Business Wire | | Wordcount: | |
OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of "a-" of Americo Financial Life and Annuity
Insurance Company (AFL) (Dallas, TX). Additionally, A.M. Best has affirmed the ICR of "bbb-" and debt rating of "bbb-" on $125 million 7.875% senior unsecured notes of Americo Life, Inc. (Americo) (Kansas City, MO). Concurrently, A.M. Best has downgraded the FSR to B+ (Good) from A-(Excellent) and ICR to "bbb-" from "a-" of Great Southern Life Insurance Company (Great Southern) (Dallas, TX). The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)
While Great Southern has historically been a material source of new business for Americo, the company is no longer a key component of Americo's marketing strategy, as Great Southern only has modest amounts of non-core business being issued in just two states.
The ratings of Americo primarily reflect the adequate risk-adjusted capitalization of the statutory operating companies despite the dislocation in the financial markets over the past year, as well as the favorable operating profitability that is primarily attributable to the strong earnings generated by its stable and highly profitable closed blocks of ordinary life business. Additionally, Americo continues to generate adequate spreads on its annuity business. Furthermore, Americo's financial leverage and interest coverage ratios remain well within A.M. Best's guidelines for its current ratings.
While the company's statutory capital position benefited from a $25 million capital contribution from its parent and the conversion of $60 million of surplus notes to paid-in capital during second quarter 2009, A.M. Best notes that surplus notes still represent approximately 30% of adjusted capital and surplus. In addition, Americo maintains a substantial amount of reinsurance leverage. A.M. Best also believes the company's risk-adjusted capital position may be strained if it were to experience significant asset impairments or further negative ratings migration within its fixed income portfolio over the near term.
Through its branded marketing focus, expanded distribution and product development initiatives, AFL has historically generated strong life and annuity sales growth. However, life sales have declined in 2009 due to the company's strategic decision to eliminate sales of certain life insurance products. A.M. Best believes that AFL may be challenged to increase sales going forward due to the competitive markets in which it operates and the current recessionary environment.
The FSR of A- (Excellent) and ICR of "a-" have been affirmed for Americo Financial Life and Annuity Insurance Company.
The FSRs of B+ (Good) and ICRs of "bbb-" have been affirmed for the following life/health subsidiaries of Americo Life, Inc.:
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National Farmers Union Life Insurance Company
-
The Ohio State Life Insurance Company
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Investors Life Insurance Company of North America
The FSR has been downgraded to B+ (Good) from A- (Excellent) and the ICR to "bbb-" from "a-" for Great Southern Life Insurance Company.
The ICR of "bbb-" has been affirmed for Americo Life, Inc.
The following debt rating has been affirmed:
Americo Life, Inc."
-- "bbb-" on $125 million 7.875% senior unsecured notes, due May 2013
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
A.M. Best Co.
Analysts
Michael Adams
(908) 439-2200, ext. 5133
michael.adams@ambest.com
or
Thomas Rosendale
(908) 439-2200, ext. 5201
thomas.rosendale@ambest.com
or
Public Relations
Jim Peavy
(908) 439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com
Source: A.M. Best Co.
This is a news service of Thomson Business Intelligence Service ©2006. This content is for your personal use only, subject to Terms and Conditions. No redistribution allowed.
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