A.M. Best has downgraded the financial strength rating to C++ (Marginal) from B- (Fair) and the issuer credit rating to “b+” from “bb-” and placed the ratings under review with negative implications for United Security Assurance Company of Pennsylvania (United Security) (Souderton, PA).

The rating actions are a result of A.M. Best’s review of United Security’s most recent regulatory statements in which the company reported a substantial operating loss, causing a sharp decline in absolute and risk-adjusted capitalization. The primary driver of the decline was the continued unfavorable claims experience on certain blocks of acquired long-term care (LTC) business. This experience resulted in increases in claim reserves and is consistent with recently published industry data regarding claims experience and incidence rates of older-aged policyholders. Although management is actively working to implement an improvement plan, which includes the pursuit of material rate increases to help improve operating performance in its acquired LTC business, A.M. Best believes these actions will take time to have a meaningful impact on future operating results. Additionally, the organization continues to be encumbered by high financial leverage at its parent, CMS Financial Services Corp.

In placing the company’s ratings under review with negative implications, A.M. Best believes that given United Security’s adverse underwriting results in its legacy LTC blocks, it will be challenged to reverse declining capital and surplus trends and improve risk-adjusted capitalization without a meaningful infusion of capital. A.M. Best expects to meet with United Security's management shortly to review alternatives to improve its capitalization, after which A.M. Best expects to resolve the under review status.

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.

Key insurance criteria reports utilized:

• A.M. Best's Liquidity Model for U.S. Life Insurers

• Analyzing Insurance Holding Company Liquidity

• Risk Management and the Rating Process for Insurance Companies

• Understanding BCAR for U.S. and Canadian Life/Health Insurers

• Insurance Holding Company and Debt Ratings

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

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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A.M. BestKate Steffanelli, 908-439-2200, ext. 5063Senior Financial Analystkathryn.steffanelli@ambest.comorAndrew Edelsberg, 908-439-2200, ext. 5182Vice Presidentandrew.edelsberg@ambest.comorChristopher Sharkey, 908-439-2200, ext. 5159Manager, Public Relationschristopher.sharkey@ambest.comorJim Peavy, 908-439-2200, ext. 5644Assistant Vice President, Public Relationsjames.peavy@ambest.com