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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 14, 2011 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to negative from stable and affirmed the issuer credit rating (ICR) of "bbb+" of Unified Life Insurance Company (Unified Life) (Dallas, TX). A.M. Best also has affirmed the financial strength rating of B++ (Good) of Unified Life. The outlook for the FSR is stable.
The revised outlook reflects Unified Life's declining risk-adjusted capitalization trend, which has been driven by a series of acquisitions in recent years, as well as the reclassification of 11 impaired multi-class commercial mortgage-backed securities to NAIC class five and six at year-end 2010. Unified Life had approximately $1.0 million in unrealized capital losses related to these securities in 2010. A.M. Best is concerned that additional write-downs may be necessary near term in the company's below investment grade bond portfolio, which has been increasing as a percentage of its total capital and surplus, potentially further weakening its risk-adjusted capital position.
The company intends to hold all of these securities to maturity as its external investment management firm does not regard their impairments as permanent.
Unified Life primarily acquires closed blocks of individual health and life insurance business, as well as insurance companies, via assumption and indemnity reinsurance and mergers. It also underwrites group and individual health and life insurance products in joint venture partnerships with other carriers in selected niche markets.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Rating Health Insurance Companies"; "Risk Management and the Rating Process for Insurance Companies"; "BCAR for Life and Health Insurers"; and "Assessing Country Risk." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.