A.M. Best Affirms Ratings of Subsidiaries of Securian Financial Group, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength ratings (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of Minnesota Life Insurance Company(Minnesota Life) and its subsidiary, Securian Life Insurance Company (Securian Life). In addition, A.M. Best has upgraded the FSR to A (Excellent) from A- (Excellent) and the ICR to “a” from “a-” for Securian Casualty Company (Securian Casualty).

Concurrently, A.M. Best has removed from under review with negative implications and affirmed the FSRs of A- (Excellent) and the ICRs of “a-” of Balboa Life Insurance Company(Irvine, CA) and Balboa Life Insurance Company of New York (Tarrytown, NY). The outlook for all ratings is stable. All companies are subsidiaries of Securian Financial Group, Inc. All the above named companies are domiciled in St. Paul, MN, unless otherwise specified. (See below for a detailed list of companies and ratings.)

The ratings reflect Minnesota Life’s continued strong reported risk-adjusted capitalization and improved overall earnings levels, although statutory earnings remain somewhat below historical levels. In addition, Minnesota Life’s financial leverage remains at modest levels for its ratings, with no pending debt maturities. A.M. Best notes that the group’s exposure to certain product and asset risks and level of financial leverage and intangibles to equity are viewed as lower than its peers.

The ratings also recognize the group’s diversified sources of earnings, conservative investment management philosophy, sound liquidity position and diverse product portfolio. In recent years, the group has focused on expense management initiatives as well as additional distribution capacity. Minnesota Life recorded increased sales of individual life insurance in the last two years due to efforts to strengthen its independent distribution group agent channel.

Offsetting rating factors include the organization’s exposure to equity market volatility through its asset management and separate account business lines, as well as in its corporate pension program. The group also maintains exposure to commercial real estate through direct mortgage loans, alternative assets and commercial mortgage-backed securities. A.M. Best notes that the mortgage loan portfolio has performed well to date, with very little problem loan activity. A.M. Best expects that earnings levels will remain below historical norms for the near term given continued uncertainty in economic conditions and the recent strain from new business production.

The rating upgrades for Securian Casualty reflect A.M. Best's view of its role as a more integral part of Securian as it has enabled the parent to deliver a broad range of credit insurance product offerings and services to the financial institution market nationwide.

A.M. Best believes that Minnesota Life and Securian Life are well positioned at their current ratings in the near term. Factors that could lead to negative rating actions include a considerable decline in operating income or capitalization relative to A.M. Best’s expectations or loss of new business production in important business lines.

The FSRs of A- (Excellent) and ICRs of “a-” have been affirmed for the following subsidiaries of Securian Financial Group, Inc.:

• American Modern Life Insurance Company
• Cherokee National Life Insurance Company
• CNL/Insurance America, Inc.

The FSR of B++ (Good) has been upgraded to A- (Excellent) and the ICR of “bbb” to “a-” for Southern Pioneer Life Insurance Company, a subsidiary of Securian Financial Group, Inc.

The following debt rating has been affirmed:

Minnesota Life Insurance Company—
-- “a” on $125 million 8.25% surplus notes, due 2025

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. Key criteria utilized include: “Understanding BCAR for Life/Health Insurers”; “Understanding BCAR for Property/Casualty Insurers”; “A.M. Best’s Ratings & the Treatment of Debt”; “Rating Members of Insurance Groups”; “Assessing Country Risk”; and “Risk Management and the Rating Process for Insurance Companies.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, 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 © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Andrew Gold, 908-439-2200, ext. 5487
Senior Financial Analyst
[email protected]
or
Richard McMillan, 908-439-2200, ext. 5615
Managing Senior Financial Analyst
[email protected]
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.