A.M. Best Co. has 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 (Independence American) (New Castle, DE). Concurrently, A.M. Best has affirmed the ICR of “bbb-” of the parent company, Independence Holding Company (Independence Holding) (Stamford, CT) [NYSE: IHC]. The outlook for all ratings is stable.

The ratings reflect the organization’s continuing product and earnings diversification, conservative underwriting and improved capitalization. Independence Holding’s insurance operations continue to generate operating earnings across all lines of business. Over the past few of years, the group has been introducing several new 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 prior years. A.M. Best notes that the insurance subsidiaries within Independence Holding have been placing increasing emphasis on business written through controlled distribution. These efforts have enabled Madison National, Standard Security and Independence American to generate less volatile operating results and enhance the organization’s risk-adjusted capital position.

While operating earnings within Independence Holding and its subsidiaries have remained fairly consistent, A.M. Best remains concerned about the lack of growth within its core lines of business. A.M. Best believes that the restructuring of its distributors, competitive pressures and regulatory uncertainties are the primary reasons for the organization’s limited growth. Additionally, A.M. Best is concerned that the possibility of another economic downturn could result in credit migration and realized losses within the group’s investment portfolios. However, A.M. Best recognizes that Independence Holding has taken several steps over the past couple of years to de-risk its investment portfolio and that the organization has moved into a statutory unrealized gains position as of June 30, 2011.

A.M. Best believes Independence Holding is well positioned at its current rating level in the near to medium term. Factors that may lead to negative rating actions include a declining trend in net premiums within the organization’s core lines of business, material deterioration of risk-adjusted capital within the insurance subsidiaries, or if future regulatory changes have a measurable impact on future operating results.

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/Health Insurers”; “Rating Health Insurance Companies”; “Rating Members of Insurance Groups”; “A.M. Best’s Liquidity Model for U.S. Life Insurers”; and “A.M. Best’s Perspective on Operating Leverage.” 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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