Press Release - APRIL 11, 2008    
 
 

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

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Kathryn Steffanelli
(908) 439-2200, ext. 5063
kathryn.steffanelli@ambest.com

Carl Austin
(908) 439-2200, ext. 5500
carl.austin@ambest.com


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Jim Peavy
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Rachelle Morrow
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rachelle.morrow@ambest.com
 
 

 

 

 

FOR IMMEDIATE RELEASE

 

 

  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.
 
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