A.M. Best Affirms Ratings of Investors Heritage Life Insurance Company

A.M. Best Co. has affirmed the financial strength rating of B+ (Good) and issuer credit rating (ICR) of “bbb-” of Investors Heritage Life Insurance Company (Investors Heritage Life) (Frankfort, KY). Concurrently, A.M. Best has affirmed the ICR of “bb-” of its holding company, Investors Heritage Capital Corporation (formerly known as Kentucky Investors Inc.) [IHRC.OB]. The outlook for all ratings is stable.

The ratings reflect Investors Heritage Life’s adequate level of risk-adjusted capitalization and historically stable operating profitability. At year-end 2008, risk-adjusted capitalization declined due to a loss of absolute capital and surplus. This loss in capital and surplus was driven by the net loss in realized capital losses, which is attributable to other-than-temporary impairments in the investment portfolio. However, net operating earnings have remained positive over the last five years.

Partially offsetting the above positive rating factors are the decline in direct premiums written over the past five years despite Investors Heritage Life’s niche presence in the preneed marketplace and high level of mortgage loans relative to capital. While the mortgage loan portfolio continues to perform well, with few problem mortgages the last five years, A.M. Best remains concerned about the potential for problems going forward, given the current state of the economy.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.