Best’s News & Research Service - May 31, 2007 11:48 AM (EDT)
A.M. Best Takes Various Rating Actions on American Underwriters Life Insurance Group
OLDWICK, N.J. //BestWire// - A.M. Best Co. has affirmed the financial strength rating (FSR) of B- (Fair) and assigned an issuer credit rating (ICR) of “bb-” to American Underwriters Life Insurance Company (American Underwriters) (Phoenix, AZ), the lead life insurer within the American Underwriters Life Group (AULG). The outlook for the FSR has been revised to stable from negative, and the outlook assigned to the ICR is stable. Additionally, A.M. Best has downgraded the FSR of B+ (Good) to B- (Fair) of Century Life Assurance Company (Oklahoma City, OK) and removed the rating from under review with negative implications. A.M. Best also has assigned an ICR of “bb-”to Century Life. The outlook for these ratings is stable.
The change in the rating outlook for American Underwriters reflects its improved risk-adjusted capital position following the divestiture of its property and casualty subsidiary and the sale of a number of below investment grade bonds. The rating continues to reflect the company’s volatility in earnings and premium income, disintermediation risk in its large annuity block, as well as its historically risky investment strategy.
The downgrade of Century Life’s rating reflects its new ownership by American Underwriters. In addition, the company has recorded a generally modest level of premium income and declining statutory earnings. A.M. Best anticipates that Century Life will serve as a key marketing channel for credit insurance for American Underwriters and will maintain an adequate capital position for its rating.
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