Fitch Affirms UNIFI’s IFS Ratings at ‘A+’; Outlook Stable

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings of UNIFI Mutual Holding Company's (UNIFI) insurance subsidiaries. The affirmed ratings include the 'A+' Insurer Financial Strength (IFS) ratings of Ameritas Life Insurance Corp (Ameritas), First Ameritas Life Insurance Corp. of New York (First Ameritas), Acacia Life Insurance Company (Acacia), and The Union Central Life Insurance Company's (Union Central) . The Rating Outlook is Stable. A full rating list is shown below.

The rating affirmation and Stable Outlook is based on the strength of capital within the insurance operations of UNIFI and improved earnings for 2010. Total adjusted capital (TAC) was $1.5 billion and estimated consolidated risk based capital (RBC) was 598% at Dec. 31, 2010 versus $1.3 billion and 553%, respectively for 2009. Prior to the economic crisis estimated year-end 2007 TAC was $1.7 billion and RBC was 626%. Fitch believes the current capital position is very strong for the rating category but expects UNIFI to maintain high levels of statutory capitalization due to modest business growth expectations and the company's status as a mutual insurer. Fitch's view of capital also benefits from the company's limited use of financial leverage, which is less than 3%.

UNIFI's 2010 net income, which had been negatively impacted by the economic downturn and difficult financial market conditions, was positive for the first time in two years due to improved investment results.

The ratings also consider competitive challenges facing UNIFI as a mid-size life insurer competing against companies with much larger scale and capital resources. UNIFI's size can limit its ability to gain expense efficiencies and certain distribution relationships.

Lastly, Fitch notes that the GAAP operating earnings of the company's non-insurance operations, namely Acacia Federal Savings Bank and Calvert Group, improved greatly in 2010 due to the effect of the market rebound on its market sensitive products.

Key ratings drivers that could result in an upgrade include:

--The return of RBC to pre-economic crisis levels that were in the low-to-mid-600% range.

--Improved earnings and scale in the life insurance industry that would result in an operating return on TAC of approximately 10%-11%.

The key rating drivers that could result in a downgrade include:

--A prolonged decrease in capital and an RBC below 450%.

--Investment losses above Fitch's expectations.

--Acquisition activity that materially weakens UNIFI's financial profile, including increased leverage above 10%.

UNIFI is the mutual holding company and ultimate parent of the insurance operations headquartered in Lincoln, Nebraska. UNIFI has offices in Lincoln, Nebraska; Bethesda, Maryland and Cincinnati, Ohio. The company offers life insurance, annuities, individual disability insurance, group dental and eye care, retirement plans, investments, mutual funds, banking, and public finance. UNIFI had $17.6 billion in GAAP assets and $2.3 billion in equity as of Dec. 31, 2010, on a consolidated basis.

Fitch affirms the following ratings with a Stable Outlook:

Union Central Life Insurance Company

--IFS at 'A+';

--Issuer Default Rating at 'A';

--Surplus note 8.2% due 2026 at 'A-'.

Ameritas Life Insurance Corp.

First Ameritas Life Insurance Corp. of New York

Acacia Life Insurance Company

--IFS at 'A+'.

Additional information is available at 'www.fitchratings.com'. The above ratings for Ameritas, First Ameritas, and Acacia have been initiated by Fitch as a service to investors. For all ratings the issuer did not participate in the rating process other than through the medium of its public disclosure.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (March 31, 2011);

--'Life Insurance Rating Methodology' (March 31, 2011).

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=614266

Life Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=612905

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Fitch Ratings
Primary Analyst:Bruce E. Cox, +1-312-606-2316
Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60603
or
Secondary Analyst:Douglas L. Meyer, +1-312-368-2061
Managing Director
or
Committee Chairperson:Mark E. Rouck, +1-312-368-2085
Senior Director
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Media Relations:Brian Bertsch, +1-212-908-0549
Email: [email protected]

Source: Fitch Ratings