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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - SEPTEMBER 16, 2005 12:00 AM (EDT)
A.M. Best Co. has assigned a financial strength rating of B+ (Very Good) to Atlantic Coast Life Insurance Company (Charleston, SC). The rating outlook is stable.
This rating reflects ACL's improved level of capitalization, recent positive operating earnings and expanded product portfolio. These factors are offset by the higher level of investment and concentration risk on its balance sheet, limited business profile, modest earnings and single state focus.
ACL's capital level increased significantly in 2004, primarily due to the sale of a real estate property, which provides the company with adequate capital to support expected future business production. While profitable results have been recorded in each of the last three years, new business strain related costs have kept statutory earnings at low levels. ACL is actively pursing geographic expansion and expects to enter additional markets in the near future. ACL's recent entry into the pre-need market has led to a return of positive growth in premium revenue.
ACL has increased its levels of equity and mortgage holdings in recent periods. The higher allocation to real estate-linked assets and equities, which includes single large investments, has somewhat depressed the level of risk-adjusted capitalization. In addition, ACL faces execution risk as it enters its new geographic and product markets, while its pre-need business has yet to develop material trends.
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