CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JANUARY 04, 2006 12:00 AM (EST)
A.M. Best Co. has taken various rating actions on the key life/health subsidiaries now operating as the UNIFI Companies (UNIFI). These rating actions follow the January 1, 2006 formation of UNIFI Mutual Holding Company via merger of the two holding companies for The Ameritas Acacia Companies and The Union Central Life Insurance Company (Union Central) (Cincinnati, OH) and their affiliated companies.
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and assigned issuer credit ratings (ICR) of "a+" to Ameritas Life Insurance Corp. (Lincoln, NE), its New York subsidiary, First Ameritas Life Insurance Corp of New York (Suffern, NY) and Acacia Life Insurance Company (Bethesda, MD)-core subsidiaries of The Ameritas Acacia Companies.
A.M. Best has also removed from under review and upgraded the FSR to A (Excellent) from A- (Excellent) and the ICR to "a" from "a-" of Union Central. Concurrently, A.M. Best has upgraded the debt rating to "bbb+" from "bbb" on Union Central's $50 million 8.2% surplus notes, due 2026. All ratings have a stable outlook.
On a combined basis, UNIFI has total assets under management in excess of $25 billion, insurance assets of approximately $15.8 billion and $1.9 billion in GAAP equity. A.M. Best expects UNIFI to maintain superior capitalization levels, on both an absolute and risk-adjusted basis, gain efficiencies through increased scale in its individual life and annuity business lines, broaden its portfolio of complementary products and services and expand its geographical footprint in a number of target markets. Additionally, A.M. Best believes the merger enhances the group's already diverse operating platform and creates the opportunity to leverage each company's distribution systems to provide varied revenue sources and sustainable earnings for UNIFI. More specifically, the merger will provide critical mass to UNIFI's individual life and annuity lines, strengthen its overall competitive market position and unite two firms with solid franchises, which are largely complementary in nature, namely group dental and eye care insurance, life insurance and annuities (both fixed and variable), individual disability income products, mutual funds, investments, retirement plans, banking, worksite benefits and public finance.
These strengths are tempered by the challenge to successfully integrate the two organizations, particularly in the areas of distribution, systems and senior management. Additionally, execution risk remains to realize the full benefits of the merger, which include anticipated double-digit top line revenue growth within the insurance lines, realization of expense synergies and development and expansion of a well-branded individual and retirement plans marketing and distribution strategy-One Company Marketing. Moreover, UNIFI must retain its existing distribution and minimize policyholder lapses to position the organization for earnings growth. In the near term, GAAP operating returns will be dilutive given merger related expenses and are not expected to increase significantly in the near to medium term despite planned realization of cost savings. A.M. Best notes that capital will remain at superior levels with very low financial leverage; however, the combined entity will continue to be challenged to leverage its capital in such a manner that substantially improves operating performance.
A.M. Best has also affirmed the FSR of A (Excellent) and assigned an ICR of "a" to Ameritas Variable Life Insurance Company (AVLIC) (Lincoln, NE). The rating outlook is stable.
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