Market Overview

A.M. Best Revises Outlook of Life Insurance Company of Alabama


A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of Life Insurance Company of Alabama (LICOA) (OTCBB:LINSA) (Gadsden, AL).

The ratings and revised outlook reflect LICOA's established niche market in its supplemental accident and health/life insurance segment, consistent positive earnings trends and profitability levels and improvement in its historically elevated risk profile.

LICOA is a small, closely held public company that has offered supplemental insurance products to employer groups and individuals since 1952. Over the past few years, the company has reported consistently positive operating results, despite several one-time items and unfavorable results in its unlimited cancer block of business. These earning have continued to bolster its risk-adjusted capitalization, which remains strong as measured by Best's Capital Adequacy Ratio (BCAR).

A.M. Best believes that LICOA has materially reduced its exposure in its unlimited cancer block. This is the result of the settlement of two class action lawsuits in late 2011 (which had been previously reserved for), combined with the conversion of the majority of its unlimited cancer policies to limited benefit policies. A.M. Best will continue to monitor the impact that this block of business has on the company going forward.

Offsetting rating factors include LICOA's flat premium revenue over the last few years, its business concentration in the cancer insurance market and its concentration of business in only a few southeastern states.

Future positive rating actions could occur if LICOA maintains its earnings and capital levels and continues to grow and diversify its non-cancer lines of business as well as expand its business beyond its core four state marketing territory. Conversely, negative rating actions could occur if the company's premium revenue were to substantively decline, earnings trends materially differ from historical results and projections and either risk-adjusted or absolute capital significantly deteriorates.

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. Best's Credit Rating Methodology can be found at

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

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Brian Virostek, 908-439-2200, ext. 5531
Financial Analyst
Joseph Zazzera, MBA, 908-439-2200, ext. 5797
Assistant Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations

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