A.M. Best Affirms Ratings of UNIFI Companies.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a+" of the four key life/health subsidiaries comprising the UNIFI Companies (UNIFI): Ameritas Life Insurance Corp. (Lincoln, NE), The Union Central Life Insurance Company (Union Central) (Cincinnati, OH), First Ameritas Life Insurance Corp. of New York and Acacia Life Insurance Company (Bethesda, MD). Concurrently, A.M. Best has affirmed the "a-" rating on Union Central's existing $50.0 million 8.20% surplus notes due 2026. The outlook for all ratings is positive.

The ratings reflect UNIFI's strong growth trends in individual insurance, significant agency distribution expansion, excellent consolidated risk-adjusted capitalization and highly diversified operating platform. The group's operations are well-diversified with core lines including life insurance, annuities, disability income insurance, retirement plans, mutual funds, banking and group dental and eye care insurance. On a post-merger basis, UNIFI has significantly improved its competitive scale within individual life and continues to enjoy a top-five market position within the group voluntary dental market. The group benefits from its ownership of the Calvert mutual fund family, which continues to demonstrate strong sales, net flows and growth in assets under management. Finally, UNIFI's overall capitalization levels are strong, on both an absolute and risk-adjusted basis, with modest financial leverage, below average intangibles and a generally conservative investment posture supporting its high quality balance sheet. A.M. Best expects the group's operating performance to improve meaningfully over the next five years, given anticipated expense efficiencies, distribution expansion and solid life sales growth.

These strengths are tempered by industry wide competitive challenges within its individual life and annuity lines as the U.S. market continues to mature and consolidate, increased competition in group dental and eye care, some disintermediation within its annuity lines, and ongoing spread compression. A.M. Best believes that scale and financial flexibility are increasingly important within the U.S. life and retirement savings arena. UNIFI will need to continue to demonstrate solid top-line growth to gain additional scale in the retirement plans and variable annuity (VA) segments, which currently are somewhat modestly-sized lines of business. A.M. Best notes that the company recently introduced a new VA living benefit rider which should help to improve market share. Additionally, UNIFI has some exposure to mortgage-backed investments that will result in GAAP accounting write-downs. The losses are considered to be non-economic as all mortgages within the pools are currently paying principal and interest. A.M. Best will continue to monitor the ongoing deterioration within the U.S. housing sector and its impact on life and annuity company balance sheets. Finally, enterprise risk management, while embedded throughout the organization, will need to continue to be refined consistent with the group's sound corporate governance practices and financial discipline.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.