AM Best


A.M. Best Upgrades Ratings of USHEALTH Group, Inc.'s Subsidiaries


CONTACTS:


Doniella Pliss
Senior Financial Analyst
(908) 439-2200, ext. 5104
doniella.pliss@ambest.com

Sally Rosen
Assistant Vice President
(908) 439-2200, ext. 5280
sally.rosen@ambest.com

Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - APRIL 16, 2014 02:01 PM (EDT)
A.M. Best has upgraded the financial strength rating to B (Fair) from B- (Fair) and the issuer credit ratings to "bb" from "bb-" for the subsidiaries of USHEALTH Group, Inc., which include Freedom Life Insurance Company of America (Freedom Life) and National Foundation Life Insurance Company, commonly known as USHEALTH Group. The outlook for all ratings has been revised to stable from positive. All companies are domiciled in Fort Worth, TX.

The rating upgrades reflect USHEALTH Group's successful strategy to focus on products that are not subject to The Patient Protection and Affordable Care Act (PPACA)--the sales of which resulted in profitable growth, strong operating results and improved capitalization. In addition, the holding company repaid a portion of its debt and refinanced the remaining portion on more favorable terms during the first quarter of 2014. USHEALTH Group remains focused on further enhancing its "exempt" and ancillary product offerings, expanding captive distribution into new geographies and maintaining long-term customer relationships as a means of increasing its scale and brand recognition in the marketplace.

Partially offsetting these positive rating factors is USHEALTH Group's need to service the remaining debt of USHEALTH Group, Inc. A.M. Best believes that USHEALTH Group's capital and surplus growth will be impeded by debt service, as USHEALTH Group, Inc. relies partially on dividends from Freedom Life to repay its debt in the next few years. In addition, USHEALTH Group remains challenged to maintain the growth of its supplemental medical products, especially as potential customers are eligible for subsidies on federal health insurance exchange products. Moreover, other small and mid-sized health carriers may enter the PPACA "exempt" product space, potentially pressuring USHEALTH Group's market position.

Future positive rating actions may result from organic earnings growth, further reduction in leverage throughout the organization, continued strong operating results and growth of risk-adjusted capitalization levels for each of the subsidiaries. Negative rating actions could occur due to weakened operating performance, increased financial leverage or deterioration of risk-adjusted capitalization levels.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.


Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.