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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - FEBRUARY 10, 2004 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of Security Mutual Life Insurance Company of New York (Security Mutual) (Binghamton, NY). The outlook has been changed to positive from stable.
This action follows today's announcement that Security Mutual has signed a definitive agreement with The Ohio National Life Insurance Company (Ohio National) (Cincinnati, OH), under which Security Mutual will join the Ohio National family of companies through a sponsored demutualization. The financial strength rating of A+ (Superior) of Ohio National and its affiliates, including National Security Life and Annuity Company (NSLAC), and the "a" debt ratings on Ohio National's surplus notes are unaffected.
Under New York State law, the transaction requires the approval of the New York State Insurance Superintendent and the approval of Security Mutual's eligible policyholders. The company expects the transaction to be finalized in the next 12 to 18 months.
Security Mutual's Board of Directors has agreed to adopt a plan of reorganization whereby the company will demutualize and become a wholly owned stock subsidiary of Ohio National. Under the plan, eligible policyholders of Security Mutual will receive consideration in the form of cash or policy credits. In addition, Security Mutual will establish a "closed block", which sets aside certain assets to provide for the payment of benefits and dividends on participating policies owned by eligible individual policyholders.
The transaction expands the existing relationship between the two companies, which jointly own NSLAC. A.M. Best believes that both companies have compatible cultures and that the transaction supports their mutual goals of promoting growth initiatives by gaining access to new markets, expanding distribution channels and increasing product lines. A.M. Best views the transaction favorably as it gives Security Mutual's distribution force access to a broader range of financial products and services - and provides a broader platform for its worksite marketing operation - while expanding Ohio National's presence in New York and the Northeast. Furthermore, A.M. Best recognizes that the affiliation will enhance Security Mutual's financial flexibility and access to capital.
A.M. Best expects that Security Mutual will continue to operate as a separate entity, maintaining a presence in Binghamton, NY as an underwriting and administrative service center for the combined organization's Northeastern customers.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.