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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 05, 2003 12:00 AM (EDT)
6152; 68595; 6002; 8607;
A.M. Best Co. has downgraded the financial strength rating to A (Excellent) from A+ (Superior) of Ameritas Life Insurance Corp. (Ameritas Life) (Lincoln, NE) and its New York subsidiary, First Ameritas Life Insurance Corp of N.Y. A.M. Best has also affirmed the financial strength rating of A (Excellent) of Acacia Life Insurance Company and Acacia National Life Insurance Company (both of Washington, D.C.). These four core operating entities are now considered the AmeritasAcacia group; and as such, the rating is based on the consolidated performance, capitalization and profile of the operating entities. The rating outlook is stable.
The rating action reflects the relatively limited growth in the organization's life insurance and retirement businesses in recent years, combined with compressed margins in the group's flagship group dental line. While A.M. Best recognizes management's initiatives to revitalize the life and retirement lines-including ongoing efforts to integrate the Ameritas and Acacia individual life platforms and expand the group's presence in the 401(k) market-A.M. Best does not expect the group to generate sustained, profitable growth in these lines in the near term due to competitive challenges.
The organization's group dental line has historically generated strong returns; however, three major factors have compressed the line's ability to sustain those strong returns: their mix of business, the economic downturn and cost pressures on employee benefits. Given current market dynamics, A.M. Best believes that reaching historical return levels will be difficult, as industry-wide margins reflect growing competitive pressure. Nonetheless, A.M. Best does recognize the organization's strong position in the dental market as a leading provider of indemnity products as well as its sound business model and operating fundamentals. A.M. Best expects that the group's dental line will continue to perform well relative to its peers but also expects that the earnings growth will be tempered.
The group's Excellent rating recognizes its superior risk-adjusted capitalization, the financial flexibility of its mutual holding company structure and the lack of financial leverage in the organization. In addition, the rating reflects the group's diverse operating profile, which includes financial services-related subsidiaries that complement the core insurance operations.
A.M. Best has also affirmed the financial strength rating of A (Excellent) of Ameritas Variable Life Insurance Company (AVLIC) (Nebraska), a joint venture with AmerUs Life Insurance Company. This rating has a stable outlook. AVLIC is not considered part of the AmeritasAcacia group for rating purposes due to its ownership structure; however, the rating reflects the strategic and operating benefits of its affiliation with the AmeritasAcacia companies.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.