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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 16, 2008 12:00 AM (EDT)
A.M. Best Co. has revised the rating outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of Illinois Mutual Life Insurance Company (Illinois Mutual) (Peoria, IL).
The negative outlook and rating affirmations of Illinois Mutual are based on its significant asset concentration risks, which expose it to potential write-downs based on current low valuations. Additionally, Illinois Mutual has reported declining net operating gains and third quarter 2008 realized capital losses taken after the sale of its Freddie Mac and Fannie Mae preferred stock and the resulting reduction in the company's statutory capital and surplus funds. Furthermore, A.M. Best notes that Illinois Mutual continues to maintain a significant exposure to commercial mortgage loans, collateralized debt obligations and other structured securities. Although performing well historically, the commercial mortgage loan portfolio comprises approximately two-thirds of Illinois Mutual's capital and surplus position. Additionally, the company faces a challenge in managing surrender activity in the interest-sensitive annuities that are reaching renewal status in a low interest rate environment.
Illinois Mutual's ratings continue to recognize positive net gains from its operations, diversified lines of business and its continuing niche in the disability insurance marketplace.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
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.