Contact Center Solutions Industry News

TMCNet: A.M. Best Downgrades Ratings of Atlanta Life Insurance Company; Places Ratings Under Review With Negative Implications

[March 09, 2010]

A.M. Best Downgrades Ratings of Atlanta Life Insurance Company; Places Ratings Under Review With Negative Implications

OLDWICK, N.J. --(Business Wire)-- A.M. Best Co. has downgraded the financial strength rating to B- (Fair) from B (Fair) and issuer credit rating to "bb-" from "bb+" of Atlanta Life Insurance Company (Atlanta Life) (Atlanta, GA). These ratings have been placed under review with negative implications. Atlanta Life is the life insurance member of Atlanta Life Financial Group, Inc.

The rating actions are a result of A.M. Best's review of Atlanta Life's 2009 regulatory statements. In 2009, Atlanta Life's absolute capital and surplus levels dropped significantly more than 30% from the previous year accelerating further the declining trends in capital and surplus levels that have taken place over the past several years. This decline in capital and surplus was triggered by an increase in non-admitted assets (a Georgia Department of Insurance directive) related to pledged securities and operating balances associated with an affiliate Jackson Securities, LLC (Jackson Securities) and overall net operating losses primarily derived from Atlanta Life's core assumed group life business. A.M. Best notes that loans to Jackson Securities continue to pay contractual interest, and all outstanding loan balances remain on schedule to be paid off in 2014.

This decline in absolute capital and surplus also has placed significant pressure on Atlanta Life's already modest risk-adjusted capitalization as measured by both Best's Capital Adequacy Ratio (BCAR) and state regulators. Additionally, the reduced level of capital and surplus has further diminished the company's financial flexibility, which also remains encumbered by loans made to another affiliate Atlanta Life Investment Advisors, Inc. A.M. Best notes that contractual interest also continues to be paid on these loans, which are scheduled to be paid off in 2012.

In placing the company's ratings under review with negative implications, A.M. Best believes that given Atlanta Life's modest historical operating performance results, it will be challenged to reverse declining capital and surplus trends and improve risk-adjusted capitalization without a meaningful infusion of capital. A.M. Best expects to meet with Atlanta Life's management shortly to review its capital enhancement strategies, after which A.M. Best expects to resolve the under review status.

Partially mitigating these factors are Atlanta Life's disciplined premium growth strategy of its core assumed group life business, as well as a conservative fixed-income investment portfolio that has, thus far, avoided significant realized and unrealized investment losses.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

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. For more information, visit www.ambest.com.

[ Back To Contact Center Solutions Homepage's Homepage ]


Related Contact Center Solutions Articles
[ View all Contact Center Solutions Articles ]

Socialize with us

FREE Contact Center Solutions eNewsletter

Click here to receive your targeted Contact Center Solutions Community eNewsletter.[Subscribe Now]

Industry News

Featured Resources

Contact Center Solutions Glossary of Terms

Press Releases

About the Contact Center Solutions Community

    Welcome to the Contact Center Solutions Community The Contact Center Solutions Global Online Community, Sponsored by Interactive Intelligence, is designed to serve as the industry's premier resource for information and research on Contact Center Solutions technology and deployment strategies.