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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 21, 2006 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of "a-" of Americo Financial Life and Annuity Insurance Company (AFL) (Kansas City, MO). A.M. Best has also affirmed the FSR of A- (Excellent) of Great Southern Life Insurance Company (Texas), which operates as the New Jersey marketing entity. In addition, A.M. Best has affirmed the debt rating of "bbb-" on Americo Life, Inc.'s (Americo) (Kansas City, MO) $125 million 7.875% senior notes, due 2013. The outlook for all ratings is stable.
The ratings are based upon Americo's improved STAT and GAAP profitability, its improved marketing position through the company's enhanced distribution management, measured annuity premium growth and its adequate financial leverage. The rating also recognizes AFL's asset/liability management practices and adequate statutory capital position.
Partially offsetting these factors are the highly competitive conditions in AFL's core individual life and annuity lines, its exposure to interest rate risk from its interest-sensitive life and annuity liabilities and, to a lesser extent, its securitized investments. In addition, the rating considers the increasing contribution of annuity business in terms of both premium and reserves, and AFL's exposure to the debt service of its parent.
The majority of Americo's earnings has consistently been generated from its acquired blocks of mature individual life insurance, which have experienced favorable mortality. Through increased distribution from new independent marketing organizations, the group has moderately grown annuity production, reflecting its focus on the senior markets, and expanded its production in the mortgage term and final expense life markets. While the organization has reduced its financial leverage and improved its interest coverage in recent years, A.M. Best notes that the value of business acquired - established as a result of acquisitions - combined with deferred acquisition costs, creates a moderately high level of intangible assets relative to equity.
A.M. Best has also affirmed the FSRs of B+ (Very Good) of AFL's affiliates, National Farmers Union Life Insurance Company (Texas) and The Ohio State Life Insurance Company (Texas). The outlook for these ratings is stable.
For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.