A.M. Best Downgrades Ratings of American Medical and Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. BestCo. has downgraded the financial strength rating to B- (Fair) from B (Fair) and issuer credit rating to “bb-” from “bb” of American Medical and Life Insurance Company (American Medical) (New York, NY). The outlook for both ratings is negative.

The rating downgrades reflect additional operating losses and capital deterioration in American Medical’s fourth quarter 2009 results. These unexpected losses, some of which were one time in nature and associated with earlier well-publicized problems involving American Medical’s limited medical benefit business, have left the company with a very low risk-adjusted capital position.

Additionally, the balance sheet of American Medical’s parent company, TREK Holdings, Inc., contains a large amount of goodwill, which may be subject to a write-down once its 2009 audit is completed, along with a bridge loan that will require re-financing in 2010. TREK Holdings, Inc. is currently looking to raise additional capital to stabilize its balance sheet and support future growth at American Medical.

Should TREK Holdings, Inc. be unsuccessful in its capital raising efforts later in 2010, or if American Medical’s risk-adjusted capital position does not improve materially, another downgrade will likely occur.

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.

A.M. BestCo.
Analysts:
Jeffrey Lane, 908-439-2200, ext. 5567
jeffrey.lane@ambest.com
or

carl.austin@ambest.com
or
Public Relations:
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com

Source: A.M. Best Co.