A.M. Best Downgrades Ratings of United Security Life and Health Insurance Company.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to C++ (Marginal) from B- (Fair) and the issuer credit rating to "b" from "bb-" on United Security Life and Health Insurance Company (USL&H) (Bedford Park, IL). The outlook for both ratings has been revised to negative from stable.

The rating downgrades reflect the anticipated significant deterioration in USL&H's risk-based capital position in 2008 caused by a large operating loss. Additionally, common and preferred equities represent a high percentage of its capital and surplus. Price declines and realized capital losses in these holdings in 2008 further weakened the company's capital position. The third and fourth quarters of 2008 were particularly challenging for USL&H.

While USL&H is taking steps to improve the performance of its core individual major medical business, the implementation of these actions has been delayed. Consequently, A.M. Best believes operating losses will likely continue into at least the second half of 2009 before the changes implemented by management will be reflected in its operating results. A.M. Best notes that USL&H did receive a $1 million cash contribution from its parent, J and P Holdings, Inc., late in 2008 to help partially offset the decline in its capital base.

A.M. Best will continue to monitor USL&H's operating results. Should further risk-based capital deterioration occur beyond A.M. Best's expectations, an additional downgrade would be likely.

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.