A.M. Best Places Ratings of Young America Insurance Company Under Review With Negative Implications

A.M. Best Co. has placed under review with negative implications the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of Young America Insurance Company (Young America) (Dallas, TX).

These rating actions follow the announcement on January 9, 2012 of the signing of a definitive agreement between an individual, Fred Gaylon Young, FGY, Ltd and EP Loya Group, LP (Loya) (El Paso, TX), in which Loya will acquire 100% of the equity interests of Young America and certain other affiliates.

The under review with negative implications status also reflects concurrent issues A.M. Best has regarding Young America’s current parent company’s elevated financial leverage following significant prior year restatements of its financial statements, as well as the uncertainty associated with potential strategic initiatives Loya may undertake upon acquiring Young America.

The ratings will remain under review until completion of the transaction, which is expected by the end of the first quarter of 2012, and until A.M. Best conducts further analysis and discussions with management. However, in the event that this transaction does not close, the ratings of Young America would likely be downgraded due to the existing financial condition of the company’s current parent company and the potential impact this would have on Young America’s ratings.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at http://www.ambest.com/ratings/methodology.