CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 09, 2008 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a+" of American United Life Insurance Company (AUL) (Indianapolis, IN) and its affiliates, The State Life Insurance Company (Indianapolis, IN) and Pioneer Mutual Life Insurance Company (North Dakota), comprising the OneAmerica Group (OneAmerica). Concurrently, A.M. Best has affirmed the debt rating of "a-" on the surplus notes of AUL. Additionally, A.M. Best has affirmed the ICR of "bbb+" and the debt rating of "bbb+" on $200 million 7.00% senior unsecured notes of OneAmerica Financial Partners, Inc. (Indianapolis, IN), an intermediate holding company. The outlook for all ratings is stable.
These ratings reflect OneAmerica's strong capital position, advantageous mutual holding company structure and above-average enterprise risk management for its business profile as compared to similarly rated peers. The ratings also reflect OneAmerica's diversified sources of revenues and earnings generated by its streamlined operating segments that have allowed for organic growth. Additionally, strategic acquisitions have enhanced OneAmerica's market presence and distribution capabilities in key lines, such as asset-based long-term care products and 403 (b) plans.
Offsetting these positive factors are the competitive pressures in OneAmerica's core markets, particularly in the retirement savings markets. Increasing competitive intensity in the retirement services segment has resulted in some recent challenges with net cash flows. While 2008 net cash flows have been positive year-to-date competitive pressures and regulatory changes expected in the 403(b) market could be an impediment to organic growth in this segment. Additionally, although OneAmerica's investment portfolio has an above-average allocation to mortgage-related investments relative to its peer group, A.M. Best notes that its investments are well diversified and not exposed to subprime or Alt-A collateral.
OneAmerica's unadjusted total debt-to-total capital (excluding other comprehensive income) is roughly 18%, with interest coverage of approximately seven times. Financial leverage and coverage ratios have improved modestly over the past couple of years and remain within A.M. Best's expectations for the current ratings.
The FSR of A (Excellent) and ICRs of "a+" have been affirmed for the following members of OneAmerica Group:
- American United Life Insurance Company
- State Life Insurance Company
- Pioneer Mutual Life Insurance Company
The following debt ratings have been affirmed:
American United Life Insurance Company—
- "a-" on $75 million 7.75% surplus notes, due 2026
OneAmerica Financial Partners Inc.—
- "bbb+" on $200 million 7.00% senior unsecured notes, due 2033
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.