CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 22, 2006 12:00 AM (EST)
A.M. Best Co has affirmed the financial strength rating (FSR) of A++ (Superior) for Alfa Insurance Group (Alfa) and its subsidiaries. In addition, A.M. Best has affirmed the issuer credit rating (ICR) of "aa+" for Alfa. These rating outlooks have been revised to negative from stable. A.M. Best has also assigned ICRs of "aa+" to the subsidiaries of Alfa, with a negative outlook. Concurrently, A.M. Best has downgraded the ICR and debt ratings to "aa-" from "aa" of Alfa Corp. [NASDAQ/NM: ALFA]. Both rating outlooks have been revised to negative from stable. A.M. Best has also affirmed the debt rating of AMB-1+ of Alfa Corp.'s commercial paper program. (See list below for further rating detail.)
Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and assigned an ICR of "aa-"to the Alfa Life Insurance Corporation (Alfa Life). These ratings have a stable outlook. All companies are domiciled in Montgomery, AL.
The FSR of Alfa reflects its superior capitalization, excellent long-term operating performance and sustainable competitive advantage. These positive rating factors are derived from Alfa's firmly entrenched personal lines market position in Alabama, an efficient claims service center network and cost-effective agency distribution system.
The rating further acknowledges Alfa's well-established brand name and high customer loyalty. The revised outlook reflects the unfavorable impact of catastrophic hurricane losses on Alfa's most recent operating performance, in conjunction with its significant geographic presence in the Gulf of Mexico and the expectation of increasingly frequent and severe hurricane activity in that region over the intermediate term.
Alfa Mutual Insurance Co., Alfa Mutual Fire Insurance Co. and Alfa Mutual General Insurance Co. (Alfa Mutual Group) collectively maintain approximately 55% majority ownership of Alfa Corp. and have unconditionally guaranteed all outstanding commercial paper and long-term debt.
The rating actions of Alfa Life reflect its integral role as a member of the Alfa group, where the organization has established a strong market niche in Alabama. These actions also recognize Alfa Life's steadily increasing new business production enhanced by effective cross-selling strategies within the organization and strong sales of its level-term life and universal life products, positive operating performance and favorable stand-alone risk-adjusted capitalization.
The FSR of A++ (Superior) has been affirmed for Alfa Insurance Group and its following subsidiaries:
- Alfa General Insurance Corporation
- Alfa Insurance Corporation
- Alfa Vision Insurance Corporation
- Alfa Mutual Insurance Company
- Alfa Mutual Fire Insurance Company
- Alfa Mutual General Insurance Company
- Alfa Specialty Insurance Corporation
Virginia Mutual Insurance Co. (assigned the same rating due to a quota share
reinsurance agreement with Alfa Mutual Fire Insurance Company)
The ICRs of "aa+" have been assigned to the above named subsidiaries of Alfa Insurance Group.
The ICR of "aa+" has been affirmed for Alfa Insurance Group.
The ICR has been downgraded to "aa-" from "aa" for Alfa Corp.
The following debt rating has been downgraded:
Alfa Corp.-
- to "aa-" from "aa" on $70 million senior floating rate notes, due 2017
The following debt rating has been affirmed:
Alfa Corp.-
- AMB-1+ on commercial paper program
The FSR of A+ (Superior) has been affirmed and an ICR of "aa-" has been assigned to Alfa Life Insurance Corporation.
For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.