A.M. Best Affirms Ratings of Americo Life, Inc.; Assigns Issuer Credit Ratings.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) of Americo Financial Life and Annuity Insurance Company (AFL) (Kansas City, MO) and has assigned an issuer credit rating (ICR) of "a-". A.M. Best has also affirmed the FSR of A- (Excellent) of Great Southern Life Insurance Company (Texas), which operates as the New Jersey marketing arm. In addition, A.M. Best has affirmed the debt rating of "bbb-" on Americo Life, Inc.'s (Americo) (Kansas City, MO) $125 million 7.875% senior notes, due 2013. The rating outlook is stable for all ratings.

The ratings reflect Americo's improving statutory and GAAP profitability, expanded distribution capacity, measured annuity premium and the adequate financial leverage. The rating also recognizes AFL's solid investment portfolio and adequate statutory capital position.

Partially offsetting these factors are the highly competitive conditions in AFL's core individual life and annuity lines, its exposure to interest rate risk from its interest-sensitive life and annuity liabilities and, to a lesser extent, its securitized investments. In addition, the rating considers the increasing contribution of annuity business in terms of both premium and reserves, and its exposure to the debt service of its parent.

The majority of Americo's earnings are generated from its acquired blocks of mature individual life insurance, which have experienced favorable mortality. Through increased distribution from new independent marketing organizations, the group has been able to increase annuity production, reflecting the organization's focus on the senior markets. While the organization has reduced its debt levels and improved coverage in recent years, A.M. Best notes that the value of business acquired--established as a result of acquisitions--combined with deferred acquisition costs, creates a moderately high level of intangible assets relative to equity.

The FSR of B+ (Very Good) of AFL's affiliate, National Farmers Union Life Insurance Company (Texas), has been affirmed as well. Due to the lack of new business activity, A.M. Best has downgraded the FSR of The Ohio State Life Insurance Company (Texas) to B+ (Very Good) from A- (Excellent).

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