A.M. Best Affirms Credit Ratings of Life Insurance Company of Alabama

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Life Insurance Company of Alabama (LICOA) (Gadsden, AL) (OTCBB:LINSA). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect LICOA’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

LICOA has maintained a favorable level of risk-adjusted capitalization through consistent capital growth driven by stable earnings and offset by dividends to shareholders. Net operating earnings have been driven primarily by net investment income, which has fully offset underwriting losses over the past few years. Those losses have increased partially due to high dollar claims and increased expenses associated with a systems conversion. Net premium revenue growth has been relatively flat and slightly declined over past few years attributed to a decrease in sales, an increase in reinsurance ceded and policy conversions to lower premium paying policies. Additionally, LICOA operates in a highly competitive supplemental benefits market where many of its competitors have a broad geographical reach. LICOA has exposure to geographic and product concentrations, as over three-quarters of premiums written are from four states and over one-half of premiums written are from cancer products. Lastly, A.M. Best recognizes that the risk management program is in the process of being formalized; however this is a rigorous process that may take time to fully implement.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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A.M. Best

Craig Draghi, +1 908-439-2200, ext. 5164

Financial Analyst

craig.draghi@ambest.com

or

Wayne Kaminski, +1 908-439-2200, ext. 5061

Senior Financial Analyst

wayne.kaminski@ambest.com

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Christopher Sharkey, +1 908-439-2200, ext. 5159

Manager, Public Relations

christopher.sharkey@ambest.com

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Jim Peavy, +1 908-439-2200, ext. 5644

Director, Public Relations

james.peavy@ambest.com

Source: A.M. Best