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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - FEBRUARY 07, 2006 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating of B++ (Very Good) of Central States Health & Life Company of Omaha (Central States) and its subsidiary, Censtat Life Assurance Company, both headquartered in Omaha, NE. The rating outlook has been revised to stable from negative.
The stable outlook reflects Central States' recent change in strategic direction, improving operating results and its recently improved capitalization. During 2005, the company completely reinsured its cancer and Medicare supplement lines of business to various reinsurers, effectively exiting its supplemental health business. As a result of these transactions, capital and surplus now stands at a record level and earnings have returned to more historical levels. The current focus of the company is strictly as a provider of credit insurance and related debt protection products in its large geographic area.
Central States will remain challenged to expand its presence in the highly competitive credit insurance marketplace. However, with the distractions from these supplemental health products of the last several years behind them, management can now focus exclusively on its credit insurance business model going forward. A.M. Best will continue to monitor Central States' evolving strategy within its niche credit insurance market. Additionally, A.M. Best will look for the company to continue to produce positive premium growth while maintaining favorable earnings and capital trends going forward.
A.M. Best assigned a negative outlook on Central States' rating last year based on the negative trends in its operating results, primarily related to a significant deficiency reserve taken on its cancer block, which resulted in a large loss of income and surplus at year-end 2004.
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