OREANDA-NEWS. S&P Global Ratings said today that it affirmed its 'A' financial strength and long-term counterparty credit ratings on American Heritage Life Insurance Co. (AHL). The outlook is stable.

AHL, which does business as Allstate Benefits, focuses on selling group voluntary benefits to employers across the U. S. Our rating reflects AHL's strong competitive position as it has top market positions in worksite sales in accident, critical illness, cancer, and medical insurance products. Because the voluntary business is one of the few growth markets in the U. S. insurance sector, many insurers are seeking to enter or expand their presence in the business. We believe AHL, as an established player with a wide breadth of voluntary benefit offerings, has an advantage over these new entrants. Although the company has a growth strategy in place, its competitive position may weaken if it cannot grow its revenue base and maintain its profitability amid increased competition.

The ratings also reflect our revised view of the company's financial risk profile, which we now consider as strong rather than upper adequate. This is due to a change in our treatment of First Colonial Insurance Co. (FCIC), a subsidiary of AHL, in our capital adequacy model. To evaluate AHL's capitalization, we make a risk-adjusted capital credit for its holding in FCIC, where previously we did not. Combined with AHL's small capital base (less than $1 billion), which we view as a modestly negative factor, AHL's capital and earnings score improved to strong from upper adequate. This led to two possible anchor scores. We chose the lower of the two because AHL is less diverse than its larger peers. FCIC was founded in 1987 and primarily writes credit-related property and casualty insurance coverages and automobile warranty business.

We continue to view AHL as a moderately strategic subsidiary to parent AllstateCorp.

The stable outlook reflects our expectation that over the next 18-24 months, AHL will maintain its very strong capital adequacy per our risk-based capital model.

We may lower our ratings if AHL's capital adequacy deteriorates to lower adequate, or if we revise our view of AHL to nonstrategically important to Allstate (for example, if we believe a sale of the company is impending or if AHL's operating performance deteriorates significantly).

We may raise our ratings on a stand-alone basis if we believe capital is sustainable at the very strong level and AHL successfully expands the business profitably, or if we believe the benefits business becomes strategically important to the parent.