A.M. Best Withdraws Ratings of Southland National Insurance Corporation

A.M. Best Co. has affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of Southland National Insurance Corporation (Southland National) (Tuscaloosa, AL). The outlook for both ratings is stable. Subsequently, A.M. Best has withdrawn the ratings in response to management’s request that the company no longer participate in A.M. Best’s interactive rating process. Southland National is a wholly owned subsidiary of Collateral Holdings, Ltd. (CHL), a closely held limited partnership with investments in life insurance, benefits administration and commercial and residential real estate.

The ratings of Southland National are based on its good risk-adjusted capitalization, demonstrated financial support from its parent CHL and limited business profile, as the company announced it will discontinue writing new business in the pre-need insurance market and will focus on the employee benefits market through its wholly-owned subsidiary, Southland Benefit Solutions, LLC.

Due to the current adequate levels of absolute and risk-adjusted capitalization, A.M. Best believes that Southland National has the ability to meet its ongoing obligations and anticipates an orderly run off of its pre-need business line.

Offsetting rating factors include Southland National’s fluctuating premium levels and operating results, a continued low interest rate environment and its impact on investment income and exposure to residential real estate investments relative to capital and surplus.

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: “Understanding BCAR for Life/Health Insurers” and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at http://www.ambest.com/ratings/methodology.