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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JANUARY 14, 2008 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" of Alfa Insurance Group (Alfa) and its members. Concurrently, A.M. Best has affirmed the ICR and debt ratings of "a" of Alfa Corporation [NASDAQ/NM: ALFA].
Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and the ICR of "aa-" of Alfa Life Insurance Corporation (Alfa Life). The outlook for all aforementioned ratings is stable. A.M. Best also has affirmed the debt rating of AMB-1 on the commercial paper program of Alfa Corporation. All companies, except Alfa Alliance Insurance Company, are domiciled in Montgomery, AL. (See below for a detailed list of the companies and ratings.)
The ratings reflect Alfa's solid risk-adjusted capitalization, its long-term operating performance and sustainable competitive advantage. These rating factors are derived from management's conservative operating philosophy, exceptional customer service and the group's firmly entrenched personal lines market position in Alabama.
The ratings also reflect Alfa's unfavorable operating results over the last five years within its property lines of business, competitive market conditions and its ongoing, although significantly reduced, susceptibility to severe weather-related events due to its geographic concentration of risks in the Gulf region. In addition, the group grew surplus during this period and delivered improved capital adequacy in the most recent period.
Currently, Alfa Mutual Insurance Company, Alfa Mutual Fire Insurance Company and Alfa Mutual General Insurance Company (Alfa Mutual Group) collectively maintain approximately 55% majority ownership of Alfa Corporation and have unconditionally guaranteed all of Alfa Corporation's outstanding commercial paper and long-term debt.
The ratings of Alfa Life recognize its key position as a subsidiary of Alfa Corporation, its profitable operating performance and strong stand alone risk-adjusted capitalization. The ratings also acknowledge the steadily increasing new business production in its core ordinary life segment enhanced by the strong sales of its term life products. A.M. Best notes concerns regarding Alfa Life's narrow geographic profile and heavy reliance on its affiliated property/casualty agent field force. However, these concerns are somewhat mitigated by the company's use of additional distribution networks outside of Alabama and Alfa Life's effective cross-selling activities within the organization.
The FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for Alfa Insurance Group and its following members:
- 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
- Alfa Alliance Insurance Company
The ICR of "a" has been affirmed for Alfa Corporation.
The following debt ratings have been affirmed:
Alfa Corporation—
- "a" on $70 million senior floating rate notes, due 2017
- AMB-1 on commercial paper program
The FSR of A+ (Superior) and ICR of "aa-" have been affirmed for Alfa Life Insurance Corporation.
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.