Press Release - APRIL 11, 2008    

A.M. Best Removes Ratings of Sterling Life Insurance Company From Under Review

Print this article


Kathryn Steffanelli
(908) 439-2200, ext. 5063

Carl Austin
(908) 439-2200, ext. 5500

Public Relations
Jim Peavy
(908) 439-2200, ext. 5644

Rachelle Morrow
(908) 439-2200, ext. 5378







  OLDWICK, N.J., APRIL 11, 2008
A.M. Best Co. has removed from under review with positive implications the financial strength rating of A- (Excellent) and issuer credit rating of "a-"of Sterling Life Insurance Company (Sterling) (Illinois). At the same time, A.M. Best has affirmed the ratings and assigned a stable outlook.

These rating actions follow the April 1, 2008 closing of the acquisition by Munich Reinsurance Company (Munich Re) (Germany) from Aon Corporation (Illinois) for the amount of $352 million. Munich Re is the largest health and legal expense insurer in Europe and is a strong player in the global reinsurance market. Sterling's recognizable brand name and its existing product portfolio will be a growth engine for Munich Re's international health strategy in the United States.

Sterling will benefit from its new parent's ability to provide support through reinsurance agreements and by providing capital if necessary. Sterling has maintained several consecutive years of profitability, and A.M. Best anticipates this will continue during the near term. However, with Sterling's concentration in the Medicare Private Fee for Service (PFFS) market, possible changes in the political environment have potential to challenge current reimbursement rates in the future. While Munich Re lacks experience with direct insurance sales in the United States, it does have a large presence within the European health insurance market through its subsidiary, ERGO, which is Europe's largest health insurer. Nevertheless, A.M. Best remains concerned with Munich Re's lack of experience in the highly competitive and regulated U.S. Medicare market.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.
View a list of companies related to this press release. The list will include Best's Ratings along with links to additional company specific information including related news and reports.

A.M. Bestís credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Bestís credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Bestís rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

A.M. Best Company and its subsidiaries are not registered as External Credit Assessment Institutions (ECAI) in the European Union (EU). Credit ratings issued by A.M. Best Company and its subsidiaries can not be used for regulatory purposes in the EU as per Directive 2006/48/EC. View our entire notice for complete details.