A.M. Best Affirms Ratings Of Fortis Insurance U.S. Operations

Business Wire, May 24, 1999

OLDWICK, N.J.--(BUSINESS WIRE)--May 24, 1999--

A.M. Best Co. today affirmed the ratings of all members of the U.S. operations of the Fortis Insurance Group, Milwaukee.

The affirmed ratings include the A (Superior) ratings of American Security Insurance Co. and Standard Guaranty Insurance Co.; the A (Excellent) ratings of Fortis Benefits Insurance Co., First Fortis Life Insurance Co., United Family Life Insurance Co. and Union Security Life Insurance Co.; the A- ratings of Fortis Insurance Co., John Alden Life Insurance Co., and Pierce National Life Insurance Co.; and the Financial Performance Rating of 7 (Strong) of Houston National Life Insurance Co.

The ultimate parent companies of the group are Fortis (B) of Belgium and Fortis (NL) of the Netherlands, which constitute a large, global financial service group. The U.S. companies within the group have large, well-established national market positions in their core business lines and have the commitment and financial support of the parent organizations. Over the past two years, Fortis has been active in strategically acquiring companies that would strengthen the group's position in niche markets. All members of the group maintain favorable capitalization levels and internally manage high-quality investment portfolios.

Members of the American Security Group--American Security Insurance, Standard Guaranty Insurance and Union Security Life--are leading companies within the credit-insurance market and have consistently provided favorable operating gains. In March 1999, Fortis signed a definitive agreement to acquire the American Bankers Insurance Group, another prominent credit insurer. This acquisition will strengthen Fortis' or position in the market. All of the ratings of the American Bankers' insurance units were affirmed upon the announcement of the proposed transaction.

Fortis Benefits and First Fortis operate primarily in the employee-benefit market, where together they are the second-largest writer of group long-term disability and group life coverages, and ranked fourth in group dental master contracts. Fortis Benefits experienced a significant drop in operating earnings last year due to poor claims experience in its small group medical business and continued lack of critical mass in its life and annuity operations.

Subsidiaries, Fortis Insurance and John Alden Life, concentrate on the individual and small group major-medical market, where they continue to be major participants. Parts of the companies' operations are being integrated following the purchase of John Alden last year. Both Fortis Insurance and John Alden Life have experienced deterioration in their major-medical loss ratios in recent years because of ongoing rising medical costs and rapidly increasing prescription-drug costs, which have negatively affected operating results and may linger in the near-term. Following the acquisition of Pierce National Life in 1998, Fortis, under the Fortis Family brand, has firmly established itself as the second-largest U.S. writer of pre-need life insurance, which covers funeral expenses. Pierce National's operations subsequently have been integrated with affiliate United Family Life. However, in recent years, both companies have been challenged in expanding their premium bases.

A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.