CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 09, 2008 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating (FSR) to B- (Fair) from B (Fair) and issuer credit rating (ICR) to "bb-" from "bb" for Delta Life Insurance Company (Delta Life) (Atlanta, GA). The outlook for the ratings has been revised to stable from negative.
Concurrently, A.M. Best has affirmed the FSR of B+ (Good) and ICR of "bbb-" of Delta Fire & Casualty Insurance Company (Delta Fire) (Atlanta, GA).The outlook for these ratings is stable. Subsequently, A.M. Best has withdrawn the ratings and assigned a category NR-4 (Company Request) to both companies in response to a request from the companies' management to be removed from A.M. Best's interactive rating process.
Delta Life continues to hold an extremely large position in Wachovia Corporation's (Wachovia) common stock in comparison to its total capital and surplus position. These rating actions reflect a significant reduction in the company's capital and surplus level from unrealized capital losses resulting primarily from a material devaluation of its Wachovia stock in 2007. The market value of Wachovia's stock has eroded further in 2008.
Delta Fire, a sister company to Delta Life, also holds a large portion of its policyholders' surplus in Wachovia common stock as well as Regions Financial Corp. (Regions Financial) common stock, and while Delta Fire's underwriting results in 2007 were in line with its most recent year's results, unrealized capital losses on the aforementioned bank holdings served to reduce surplus by $2 million, or 17%. The market value of the Wachovia and Regions Financial holdings shrunk further during 2008. Nevertheless, Delta Fire's risk-adjusted capitalization remains more than supportive of its FSR and ICR, which were affirmed prior to withdrawal of the ratings.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
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.