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A.M. Best Affirms Ratings of Life Insurance Company of AlabamaA.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of "bbb" of Life Insurance Company of Alabama (LICOA) (Gadsden, AL) [OTCBB: LINSA]. The outlook for both ratings is stable. The rating affirmations reflect LICOA's established regional niche market in its supplemental accident and health and life segments, a consistent earnings trend, a general improvement in its risk profile and robust risk-adjusted capitalization. LICOA historically has marketed supplemental insurance products to employer groups and individuals in the southeast United States. In recent years, the company has reported relatively consistent profitability, despite some one-time expenditures. Earnings and a recent material realized capital gain from the sale of the majority of one common stock holding continue to bolster the company's risk-adjusted capitalization, which remains strong, as measured by Best's Capital Adequacy Ratio (BCAR). The company's risk profile has improved in recent years due to a conversion of the majority of its unlimited cancer policies to limited benefit cancer policies. Offsetting rating factors include LICOA's flat premium revenue production in recent years due to policyholder conversions from higher premium unlimited cancer policies to lower premium limited cancer policies; a mandatory one-year premium rate freeze in 2012 on parts of ts cancer business; and a lower level of new sales, driven by highly competitive supplemental accident and health and life insurance markets. Additionally, the company has business and geographic concentrations in the cancer insurance market, and in four southeastern U.S. states. A.M. Best notes the unlikelihood of upward rating movement in the near-to-medium term. Conversely, negative rating actions could occur if LICOA is unable to meet its modest growth projections, cannot achieve greater diversification of its revenue and earnings, and/or material litigation or excessive claims arise in its remaining unlimited cancer block of business. 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. Key insurance criteria reports utilized:
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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