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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 30, 2010 02:00 PM (EDT)
A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of B++ (Good) and issuer credit rating of "bbb" of LifeShield National Insurance Co. (LifeShield) (Oklahoma City, OK).
The revised outlook reflects LifeShield's weakened capitalization position following the significant decline in its reported surplus in 2009, the potential for further investment impairments given the continued level of unrealized losses and the changing business mix given the shift in net premium primarily to supplemental health business.
LifeShield has shown volatility in the performance of its reinsured blocks that has caused earnings to decline in the near term, with losses in its individual accident and health segment in each of the last two years, due to acquisition costs. In addition, the level of below investment grade (BIG) securities is elevated, with a relatively high level of these BIG bonds in the lowest rating class. During 2009, LifeShield recorded a number of impairments on trust preferred securities, which resulted in a net loss for the year.
The ratings continue to reflect LifeShield's growing book of business that is expanding through reinsurance transactions and strategic acquisitions, good productivity in growing its supplemental insurance programs and the benefits of its relationship with affiliates, Midland Mortgage and MidFirst Bank.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
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.