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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JANUARY 24, 2003 12:00 AM (EST)
A.M. Best Co. has lowered the financial strength rating to B++ (Very Good) from A- (Excellent) of Lincoln Heritage Life Insurance Company (Phoenix, AZ). The rating has been assigned a stable outlook.
This rating action reflects the company's significant concentration risk and large exposure to affiliated real estate investments, mortgage loans, and other single large investments relative to its capital and surplus position.
In addition, its investment portfolio represents an exposure to geographical concentration risk, as the majority of these investments is in Arizona only and may be vulnerable to a negative impact from market and interest rate risks of that state. While the company's investment portfolio has performed well and the real estate has been actively managed by the affiliated entities, the lack of quick liquidity and heavy asset risk charges associated with the real estate and other invested assets with a single state concentration considerably impact its risk-based capitalization under A.M. Best's Capital Adequacy Model. On an operating basis, Lincoln Heritage Life has demonstrated consistent premium growth and profitability, stemming from its growing market position in the final expense life insurance industry.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.