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A.M. Best Affirms Ratings of UNIFI Companies; Revises Outlook to Positive.

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 three of the key life/health subsidiaries of the UNIFI Companies (UNIFI): Ameritas Life Insurance Corp. (Lincoln, NE), First Ameritas Life Insurance Corp. of New York (Suffern, NY) and Acacia Life Insurance Company (Bethesda, MD). Additionally, A.M. Best has affirmed the FSR of A (Excellent) and upgraded the ICR to "a+" from "a" of The Union Central Life Insurance Company (Union Central) (Cincinnati, OH). Union Central now shares the group FSR of A (Excellent), reflecting its role as a key insurance subsidiary of UNIFI. Concurrently, A.M. Best has upgraded to "a-" from "bbb+" the rating on existing surplus notes of Union Central. The outlook on the above ratings has been revised to positive from stable.

These rating actions reflect the group's superior capitalization, diversified operating platform, high quality balance sheet and improved business profile resulting from the merger with Union Central. The merger has well positioned the group for future growth by roughly doubling the size of its individual life and annuity business and broadening UNIFI's already diverse product platform, which includes life insurance, annuity, disability, retirement plans and investment products, group dental and eye care insurance, banking and mutual funds. Additionally, A.M. Best notes that the group is poised for future realization of expense efficiencies which, when complemented with strong sales growth, should result in meaningful improvement in its operating returns.

In 2006, UNIFI generated double-digit growth in life and annuity sales--a key objective of the merger--as well as strong growth in group dental and mutual fund assets under management. Group dental and eye care fundamentals continue to trend positively, benefiting from UNIFI's established position as a top-five provider, innovative product development and strong dental provider network. UNIFI's balanced operating profile is further complemented by its financial subsidiaries, which include Calvert, a leading mutual fund family specializing in socially responsible investing, and residential and commercial banking operations conducted through Acacia Federal Savings Bank. Finally, the group's overall capitalization levels are superior, on both an absolute and risk-adjusted basis, with modest financial leverage, below average intangibles and a conservative investment posture supporting its high quality balance sheet.

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. Also, UNIFI is facing continued competition within its group business, ongoing integration expenses, some disintermediation of fixed annuities and ongoing spread compression within interest-sensitive products. A.M. Best believes that scale and financial flexibility are increasingly important within the life and retirement savings arena and notes that UNIFI will need to continue to demonstrate solid top-line growth to gain additional scale in the retirement plans, disability income and variable annuity sectors. Additionally, enterprise risk management (ERM), while embedded throughout the organization, will need to continue to be refined at the enterprise level consistent with the group's sound corporate governance practices and financial discipline.

A.M. Best has also affirmed the FSR of A (Excellent) and the ICR of "a" of Ameritas Variable Life Insurance Company (AVLIC) (Lincoln, NE), a wholly owned subsidiary of Ameritas Life. The outlook for AVLIC's ratings is stable.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit
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Publication:Business Wire
Date:Feb 2, 2007
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