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A.M. Best Downgrades Ratings of Greek Catholic Union of the USA.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to C- (Weak) from B (Fair) and issuer credit ratings to "cc" from "bb" of Greek Catholic Union of the USA (GCU) (Beaver, PA). The outlook for both ratings is negative. GCU is a fraternal benefit society.

These rating actions reflect the 75% decline in GCU's unassigned funds to $6.4 million in 2008 from $26.6 million in 2007. This decline primarily was due to investment losses, both realized and unrealized, inherent under the current volatile investment markets. As a result, GCU's risk-adjusted capitalization has weakened considerably, and A.M. Best notes that regulatory capital ratios are very low.

The rating actions also reflect GCU's continuing high position in commercial mortgage-backed securities, below investment grade bonds and preferred and common stocks relative to its modest surplus position. In addition, A.M. Best notes that GCU's exposure to fixed annuities has increased in each of the past five years and represents more than nine-tenths of its total reserves, with a significant portion of its fixed annuities without surrender protection.

Partially offsetting these factors are GCU's long established presence as a fraternal benefit society and its generally positive operating results over the past five-year period. GCU's management is taking a number of steps to strengthen those areas, which have hampered surplus growth, in spite of generally favorable operating results.

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

The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at www.ambest.com/ratings/methodology.

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.
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Publication:Business Wire
Date:Mar 11, 2009
Words:318
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