A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Madison National Life Insurance Company, Inc. (Madison National) (Madison, WI), Standard Security Life Insurance Company of New York (Standard Security) (New York, NY) and Independence American Insurance Company (IAIC) (New Castle, DE). A.M. Best also has revised the outlook to stable from negative and affirmed the ICR of “bbb-” of the parent company, Independence Holding Company (Independence Holding) (Stamford, CT) [NYSE: IHC].

The revised outlook reflects Independence Holding's improved operating income from a more diverse revenue stream, growing capitalization and improved unrealized gain/loss position in its investment portfolio. Over the last several years, the organization has introduced new ancillary lines of business to further diversify its product portfolio. In addition, the organization has reported improved loss ratios within its medical stop-loss and major medical products from a few years ago. A.M. Best notes the companies have been placing increasing emphasis on business written though the distribution sources they control. These efforts have enabled Madison National, Standard Security and IAIC to generate less volatile operating results recently and the organization’s risk-adjusted capital position to improve.

Continuing concerns include the longer-term impact that health care reform will have on the organization’s major medical business, which represents a relatively small percentage of its book of business, and the potential for additional asset impairments given the current economic climate. While Madison National, Standard Security and IAIC have seen a significant turnaround in their investment portfolio valuations, there is still a potential for additional invested asset impairments. As of the third quarter of 2010, each of the companies has moved to an unrealized gain position.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition , which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Life and Health Insurers”; and “ Rating Members of Insurance Groups.” Methodologies 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.

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