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Fitch Affirms OM Financial Life Insurance Company's IFS at 'A-'; Outlook Stable.

NEW YORK -- Fitch has affirmed the 'A-' insurer financial strength (IFS) rating of OM Financial Life Insurance Company (formerly known as Fidelity and Guaranty Life Insurance Company) and assigned 'A-' IFS ratings to its wholly-owned subsidiary OM Financial Life Insurance Company of New York and its U.S. affiliate Americom Life & Annuity Insurance Company. The Rating Outlook is Stable.

OM Financial Life Insurance Company (OM Financial), OM Financial Life Insurance Company of New York and Americom Life & Annuity Insurance Co. (collectively Old Mutual U.S.) are all subsidiaries of Old Mutual U.S. Life Holdings. Old Mutual U.S. Life Holdings is a wholly-owned subsidiary of its U.K.-based ultimate parent Old Mutual plc (Old Mutual).

The most important factor in the strong IFS ratings of the Old Mutual U.S. companies is the financial strength and support of Old Mutual. Old Mutual has provided capital support, management expertise from Old Mutual U.S. Life Holdings, Inc., centralized services and reinsurance relationships. Without such parental support, Old Mutual U.S.'s ratings would be lower than the current rating category.

The ratings of Old Mutual U.S.'s companies also reflect their good liquidity, improved quality within their investment portfolios, and solid asset-liability management program. Partially offsetting these positives is the statutory earnings performance of Old Mutual U.S., which has been below rating expectations. Also below rating expectations is the companies' high operating leverage of more than 25 times (x), stemming from rapid premium growth and a concentration in fixed annuities (a product that Fitch views as having inherently higher risk attributes than traditional life products).

Fitch's expectation is that Old Mutual will continue to provide the capital necessary to support Old Mutual U.S.'s companies and maintain adequate risk-based capital (RBC) levels at a minimum of 300% until the U.S. operations are self-sufficient, which the company anticipates to occur by year-end 2007.

Fitch also expects Old Mutual U.S.'s statutory earnings to slowly improve as the profitability strain from its sales growth declines, the company reaches scale, and as it continues to aggressively manage expenses. Improvement in statutory earnings should also build up the company's surplus position, which should stabilize the operating leverage ratio.

Old Mutual U.S. focuses on manufacturing annuity and life insurance products for brokers, independent agents, and institutional distributors. Its target market is middle-market consumers saving for retirement or seeking protection-oriented products. OM Financial is Old Mutual's largest U.S. life insurance entity and along with its affiliates, forms the cornerstone of Old Mutual's U.S. strategy. Old Mutual U.S. is headquartered in Maryland with consolidated admitted assets of more than $17 billion and adjusted surplus of $750 million at Dec. 31, 2005.

Fitch affirms the following rating with a Stable Outlook:

OM Financial Life Insurance Company

--IFS at 'A-'.

Fitch assigns the following ratings with a Stable Outlook:

OM Financial Life Insurance Company of New York

Americom Life & Annuity Insurance Company

--IFS at 'A-'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Date:Jan 29, 2007
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