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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - SEPTEMBER 13, 2002 12:00 AM (EDT)
A.M. Best Co. has lowered the financial strength ratings to B+ (Very Good) from B++ (Very Good) for Vista Life Insurance Company (Dearborn, Michigan), DOBCO Life Insurance Company (Phoenix, Arizona) and Fairlane Life Insurance Company (Phoenix, Arizona). The three companies are wholly-owned life insurance subsidiaries of The American Road Insurance Company, the wholly-owned property and casualty insurer of the Ford Motor Credit Company, a subsidiary of the Ford Motor Company. The rating outlooks for the life companies are stable. The financial strength rating of The American Road Insurance Company is unaffected.
The rating actions reflect the shift in business profile of the companies as a result of the recently announced decision to discontinue the Ford Credit-Credit Insurance Program. Citing a reduced demand for credit insurance on automotive finance contracts, the life companies will no longer assume new credit life and credit disability insurance business effective November 30, 2002. At that time, the three life companies will be placed in run-off status as management explores its strategic options for those companies.
The new rating recognizes the strong capitalization on a stand-alone basis of each of the three life companies, as well as A. M. Best's expectations of improved operating performance due primarily to the expected elimination of the expenses associated with new business strain.
Additionally, the financial strength of the life companies is enhanced by the financial strength and guarantees of the parent, The American Road Insurance Company, as well as the financial strength of the ultimate parent, the Ford Motor Company. Throughout the run-off period, which is expected to last from four to five years, management is committed to maintaining adequate levels of capitalization at the life companies to support policyholder obligations. Additionally, A. M. Best will expect each life company's capitalization to be maintained at a level to support its current "secure" rating and will monitor the companies' risk-adjusted capitalization closely throughout the run-off period.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.