Fitch Places United Investors Life Insurance Company on Rating Watch Negative

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has placed the Insurer Financial Strength (IFS) rating of United Investors Life Insurance Company (UILIC), a Torchmark Corp. insurance subsidiary, on Rating Watch Negative. In addition, Fitch has affirmed the ratings and Stable Rating Outlook of Torchmark Corp. (TMK) and its other insurance subsidiaries. See the complete list of rating actions at the end of this release.

The rating action on UILIC is due to the announcement of its sale to Protective Life Insurance Company (Protective). Protective's IFS ratings are one notch lower than TMK's and the Rating Watch reflects the likely migration of UILIC's ratings to those of Protective once the acquisition closes. Prior to closing, TMK is expected to remove capital from UILIC via a special dividend of investment securities that will bring UILIC's capital position to a lower level.

The sale of UILIC, while positive for TMK's capital position, does not affect the ratings of Torchmark or its subsidiaries. UILIC is not a significant aspect of TMK's business strategy or its earning profile. The affirmation of Torchmark's other ratings reflects Fitch's view that TMK's financial and operating profile continue to be consistent with rating expectations. Investment impairments are moderate and asset quality is acceptable. TMK's gross unrealized losses declined from $723 million at Dec. 31, 2009 to $456 million at June 30, 2010.

The continued strong earnings profile of TMK's remaining insurance subsidiaries is expected to lead to improved capital and NAIC risk based capital in 2010. Earnings have proven resilient during the economic crisis and provide a strong dividend stream to the holding company.

TMK reported $17 billion in assets and $3.9 billion in shareholders equity on June 30, 2010.

Fitch places the following ratings on Rating Watch Negative:

United Investors Life Insurance Company

--IFS at 'A+'.

Fitch affirms the following ratings with a Stable Outlook:

Torchmark Corporation

--Long-term Issuer Default Rating (IDR) at 'A-';

--Short-term IDR at 'F2';

--Senior debt at 'BBB+';

--9.25% senior debentures due 2019 at 'BBB+';

--7.875% senior notes due 2023 at 'BBB+';

--7.375% senior notes due 2013 at 'BBB+';

--6.375% senior debentures due 2016 at 'BBB+';

--Commercial paper rating at 'F2'.

Torchmark Capital Trust III

--Preferred stock at 'BBB-'.

Liberty National Life Insurance Company

United American Insurance Company

Globe Life & Accident Insurance Company

American Income Life Insurance Company

--IFS at 'A+'.

Additional information is available at 'www.fitchratings.com'.

These rating actions reflect the application of Fitch's current criteria which is available on Fitch's website at 'www.fitchratings.com' and specifically includes:

--'Insurance Rating Methodology' (Aug. 16, 2010);

--'Life Insurance Ratings Criteria' (March 24, 2010);

--'Insurance Industry: Global Notching Methodology and Recovery Analysis' (Dec. 29, 2009);

--'Fitch's Approach to Rating Insurance Groups' (March 24, 2010).

Applicable Criteria and Related Research: Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547766

Life Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=506285

Insurance Industry: Global Notching Methodology and Recovery Analysis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493114

Fitch's Approach to Rating Insurance Groups

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=506368

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Fitch Ratings, New York
Brian Bertsch, +1-212-908-0549
[email protected]
or
Primary analyst:
Bruce Cox, +1-312-606-2316
Director
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Manish Patel, +1-312-368-3188
Associate Director

Source: Fitch Ratings