AM Best

A.M. Best Upgrades Ratings of the American-Amicable Group



Steven Faulks

(908) 439-2200, ext. 5035

Thomas Rosendale

(908) 439-2200, ext. 5201

Public Relations

Rachelle Morrow

(908) 439-2200, ext. 5378

Jim Peavy

(908) 439-2200, ext. 5644


OLDWICK, N.J. - MARCH 02, 2010 12:00 AM (EST)
A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and issuer credit ratings to "a-" from "bbb+" of the four life/health members of the American-Amicable Group (American-Amicable). The companies comprising American Amicable are: Pioneer Security Life Insurance Company, American-Amicable Life Insurance Company of Texas, Pioneer American Insurance Company and Occidental Life Insurance Company of North Carolina. The outlook for all ratings has been revised to stable from positive. All operating companies are domiciled in Waco, TX. American-Amicable's ultimate parent is Thoma Cressey Bravo, Inc., a private equity firm.

These rating actions reflect American-Amicable's generally increasing total-adjusted capital levels, strong risk-adjusted capitalization enhanced by its profitable operating performance and high quality fixed-income investment portfolio, which has, so far, avoided significant investment losses. A.M. Best notes the group's concentrated exposure to the residential mortgage market through its investments in mortgage-backed structured securities. However, the majority of these investments are in highly rated agency-backed securities.

These rating actions also reflect American-Amicable's controlled growth strategy, which is supported by several initiatives to further diversify its target markets and product lines. Additionally, results from the company's multi-state regulatory settlement—finalized in 2006—continue to track as anticipated. A.M. Best does not expect the settlement to have a material impact on prospective operating performance and financial strength. Moreover, American-Amicable has maintained a debt-free balance sheet following the elimination of its outstanding surplus notes in 2007.

Offsetting these positive rating factors is A.M. Best's belief that American-Amicable may be challenged over the long term to grow business in its core markets—final expense, government personnel, individual and worksite—where it competes with larger life insurance companies having greater financial resources and marketing depth. A.M. Best also believes the company may be challenged to sustain and improve its favorable historical operating performance given the expense strain associated with anticipated new business.

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.

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