A.M. Best Upgrades Ratings of Louisiana Dealer Services Insurance, Inc.'s Life Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--

A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and issuer credit rating (ICR) to “a-” from “bbb+” of First Assurance Life of America (FAL ) and Performance Life of America (PLA). A.M. Best also has upgraded the ICR to “bbb+” from “bbb” and affirmed the FSR of B++ (Good) of Versant Life Insurance Company (VLIC).

Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICRs of “a-” of Loss Deficiency Surety Insurance Company, Inc. (LDSIC), Versant Casualty Insurance Company (VCIC) and the parent company, Louisiana Dealer Services Insurance, Inc. (LDS). All companies are headquartered in Baton Rouge, LA. The outlook for all ratings is stable.

The rating upgrades for FAL and PLA reflect A.M. Best's view of the life insurance companies' role as integral subsidiaries of LDS, their ability to deliver a broad range of credit insurance product offerings and services to their customers, and the synergies gained by common management, marketing platforms and shared services. In addition, the rating upgrades consider FAL and PLA's consistent growth in capital as reflected in their solid risk-adjusted capitalization, as well as their positive earnings stream through the financial crisis. A.M. Best also notes that these companies' investment portfolio is very short term in nature with little interest rate risk and high levels of liquidity. A.M. Best believes that both companies are well positioned to grow premium volume as the health of the credit environment improves.

Although a limited contributor to the group, the upgrading of the ICR for VLIC recognizes its role as the provider of credit life and disability insurance for LDS in the Mississippi market, its adequate capitalization and positive earnings.

The rating affirmations of LDS recognize its historical profitability, supportive capitalization and established market position as a Louisiana mechanical breakdown insurer. The rating affirmations of LDSIC and VCIC acknowledge their low underwriting leverage, favorable operating performance and the financial support provided by LDS. The ratings also recognize each company's role within the group, the purposes they serve in their respective states, as well as the same inherent benefits afforded by common management, marketing and shared services.

While recognizing the group's solid capital position and consistent profitability, A.M. Best notes that growth within the enterprise depends upon the health and strength of the economy, specifically domestic auto sales. A.M. Best also notes that while auto sales have improved over the past year, a potential decrease in consumer activity can still adversely impact the associated opportunities to market these companies' core credit products.

A.M. Best believes the companies are well positioned at their current rating level. Negative rating actions could occur if the companies' capitalization and/or operating performance fall markedly short of A.M. Best's expectations. Negative rating pressure also could occur if the business profile and/or the relative importance of any of the insurance companies changes materially.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Life/Health Insurers”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; and “Assessing Country Risk.” Best's Credit Rating Methodology can be found at http://www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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