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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 09, 2005 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength ratings to B+ (Very Good) from B++ (Very Good) of Central United Life Insurance Company (CULIC) (Houston, TX) and Manhattan Life Insurance Company (MLIC) (Great Neck, NY). The rating outlook for CULIC is stable, while MLIC's rating outlook has been revised to stable from negative.
A.M. Best has also affirmed the financial strength rating of B+ (Very Good) of Investors Consolidated Insurance Company (ICIC) (Concord, NH). This rating outlook has also been revised to stable from negative. All three companies operate under the Manhattan Insurance Group (Manhattan) brand.
These rating actions reflect the companies' risk profile, particularly Central United's book of unlimited benefit cancer products. In addition, the quality of capital-notably CULIC's-was recently enhanced by additional investments in affiliated common stock. Affiliated investments now represent nearly nine-tenths of CULIC's capital and surplus position.
The organization's performance over the last few years has also fluctuated as the result of the performance associated with certain acquired cancer blocks acquired by Central United due to the volatility of these blocks. CULIC is taking rating actions to address the increasing claims costs under the cancer policies.
The group's risk-adjusted capital position improved in 2004 as a result of the organization participating in trust preferred pools issued to both the operating and holding companies within the group. A.M. Best notes that the issuance of debt instruments over the last year to retire debt at the parent company, Harris Insurance Holdings, Inc., along with support of future initiatives, has improved the capital adequacy. Manhattan has also taken a number of measures to simplify its organizational structure recently.
Central United has historically grown by making acquisitions of blocks of business. Concurrently, Manhattan has encountered some difficulty growing its own business organically. A.M. Best believes this combination could continue to cause fluctuation in its operating results.
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