A.M. Best Co. has revised the rating outlook to negative from stable and affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of Southland National Insurance Corporation (Southland National) (Tuscaloosa, AL).

The negative outlook reflects Southland National’s recent decline in capitalization due to impairments in its investment portfolio and lower after-tax operating earnings. In addition, challenges associated with market expansion in the current economic environment may hamper the company’s ability to achieve stability in its operating results in the near to medium term. Furthermore, Southland National has recorded fluctuating operating results over a five-year period and has experienced an increase in expenses as well as a decline in direct premium income. A.M. Best also notes the declining financial flexibility at Southland National’s parent company.

The ratings of Southland National continue to reflect the company’s adequate level of capitalization for its current insurance and investment risks. Southland National has implemented strategies to expand its distribution capabilities in the pre-need marketplace as part of an overall strategy to strengthen its profitability objectives.

A.M. Best will continue to monitor Southland National’s surplus levels, premium growth, expense controls and mortality trends.

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

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.