CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 30, 2008 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and issuer credit rating (ICR) to "a-" from "bbb+" of United Home Life Insurance Company (United Home) (Indianapolis, IN). The outlook has been revised to stable from positive. A.M. Best also has affirmed the FSR of A (Excellent) and ICR of "a" of United Farm Family Life Insurance Company (United Farm Family) (Indianapolis, IN). The outlook for these ratings is stable.
The upgrades reflect United Home's significant role as a provider of life insurance products outside the core markets of Indiana Farm Bureau Insurance (Indiana Farm Bureau). The upgrades also acknowledge United Home's enhanced absolute and risk-adjusted capital position, improved investment portfolio and geographic breadth. United Home complements United Farm Family's marketing efforts by providing the Indiana Farm Bureau with additional distribution through an independent agency system in 44 states, as well as ongoing and potential partnership opportunities with other Farm Bureau organizations and cross-selling opportunities within Indiana Farm Bureau.
Partially offsetting these positive rating factors are United Home's recent operating losses, modest-albeit increasing-levels of premium production and still modest contribution to the organization's overall operations. United Home has recorded net operating losses in each of the last four years due to the surplus strain of new business production; however, it is an integral part of Indiana Farm Bureau's current and future marketing strategies.
The affirmations of the ratings for United Farm Family reflect its excellent level of risk-adjusted capitalization, consistent statutory net operating gains and the historically high penetration of its affiliated customer base. A.M. Best notes that United Farm Family continues to maintain a high penetration level in its property/casualty customer base, which is a direct result of the experienced agency force that distributes both life and property/casualty products.
Partially offsetting these positive rating factors is the effect of the persistent low interest rate environment on United Farm Family's interest sensitive business, its limited business profile and exposure to mortgage loans. However, United Farm Family has had good experience with this portfolio historically, with an extremely low rate of delinquencies or foreclosures and conservative loan-to-value ratios.
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.