A.M. Best Affirms Ratings of Independence Holding Company and Its Subsidiaries

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A.M. Best Affirms Ratings of Independence Holding Company and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Madison National Life Insurance Company, Inc. (Madison National) (Madison, WI), Standard Security Life Insurance Company of New York (Standard Security) and Independence American Insurance Company (Independence American)(New Castle, DE). Concurrently, A.M. Best has affirmed the ICR of "bbb-" of the parent company, Independence Holding Company (Independence Holding) (headquartered in Stamford, CT) [NYSE: IHC]. The outlook for all ratings is stable.

The ratings reflect the group's established position in employer stop-loss, consistent profitability and improved capitalization at the operating companies. Independence Holding continues to execute its strategic business plan, which entails improving organizational effectiveness by eliminating underperforming distributors and consolidating affiliated managing general underwriters. Another facet of the group's niche strategy is to selectively expand its product portfolio, emphasizing lines that are expected to be only marginally impacted by the Patient Protection and Affordable Care Act (PPACA). Recent offerings include critical illness, mini-medical, hospital indemnity and new limited benefits and pet insurance from Independence American.


The ratings also reflect the steady operating earnings provided by Independence Holding's insurance entities, facilitated by strong relationships with various partners across its lines of business. Within the organization, earnings continue to improve driven by increased medical stop-loss sales and conservative underwriting, which has resulted in low loss ratios. A.M. Best notes that the insurance subsidiaries within Independence Holding have been placing increasing emphasis on business written through controlled distribution. These efforts have enabled Madison National, Standard Security and Independence American to generate more consistent operating results and enhance the organization's capital position. Moreover, the insurers' investment portfolios have benefitted from notable de-risking, where certain securities were divested in favor of greater quality assets while maintaining a high degree of liquidity.

While operating earnings within Independence Holding and its subsidiaries are trending favorably, A.M. Best remains concerned about the lack of growth within some of its core products segments. A.M. Best notes that the restructuring of distributors, stricter underwriting guidelines, competitive pressures and regulatory uncertainties are constraining growth within the organization's group major medical, short-term medical, group life, short-term disability and group long-term disability lines of business.

Furthermore, A.M. Best notes that Independence Holding's financial leverage is quite manageable, and interest coverage is strong at roughly 10 times.

A.M. Best believes Independence Holding and its affiliates are well positioned at their current rating levels in the near to medium term. Factors that may lead to negative rating actions include a prolonged declining trend in net premiums within the organization's core lines of business, material deterioration of risk-adjusted capital within the insurance subsidiaries, or if significant realized losses materially impact the profitability of the group.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visitwww.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.



A.M. Best Co.
Tom Zitelli
Senior Financial Analyst
(908) 439-2200, ext. 5412

tom.zitelli@ambest.com
or
Andrew Edelsberg
Vice President
(908) 439-2200, ext. 5182

andrew.edelsberg@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644

james.peavy@ambest.com

KEYWORDS:   United States  Europe  North America  New Jersey

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