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A.M. Best Downgrades Ratings of American Medical and Life Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the financial strength rating to C++ (Marginal) from B- (Fair) and issuer credit rating to “b” from “bb-” of American Medical and Life Insurance Company (AMLI) (New York, NY). Both ratings remain under review with negative implications. AMLI is a wholly owned subsidiary of TREK Holdings, Inc. (TREK).

The rating actions and under review status reflect the numerous challenges faced by AMLI. The company reported sizeable net losses and deterioration in its capitalization in the first half of 2012. Its net losses have resulted from a number of operating and non-operating items, including lower net premium revenue associated with its recent curtailment of limited medical product sales; elevated regulatory, severance and other expenses; as well as reserve strengthening. Additionally, A.M. Best has concerns over some uncertainties regarding the company’s unsettled regulatory issues and the refinancing of TREK’s outstanding note payable, due in December 2012. The ability of TREK to pay off or refinance this obligation and the terms currently remain indeterminate, and A.M. Best will continue to monitor the situation.

AMLI’s ratings will remain under review with negative implications while A.M. Best continues its dialogue with the company’s management team and has a better opportunity to assess the ultimate impact of the negative operating performance and recent events on the company’s strategic business plans and its balance sheet strength. A.M. Best also will be monitoring the potential for additional state regulatory actions and the ultimate impact of management’s corrective action plans. A.M. Best notes that AMLI’s ratings may incur further downward rating pressure based on the results of these assessments.

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 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.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Brian Virostek
Financial Analyst
908-439-2200, ext. 5531
brian.virostek@ambest.com
or
Joseph Zazzera, MBA
Assistant Vice President
908-439-2200, ext. 5797
joseph.zazzera@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
908-439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
908-439-2200, ext. 5644
james.peavy@ambest.com

Source: A.M. Best Co.