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/FIRST ADD -- NY040 -- A.M. BEST ISSUES 490 RATINGS/

 Connecticut General Life Insurance Company, Bloomfield, Conn., was assigned a 1993 Best's Rating of "A+" (Superior). The company's superior financial strength affirmed and its rating level was lowered from "A++" to "A+."
 This rating reflects Connecticut General Life's consistently strong earnings performance, its reasonable capitalization and its favorable liquidity profile. In addition, the rating acknowledges the very strong market positions that the company holds in the managed care health arena and in the corporate pension market.
 However, "partially offsetting these strengths is the company's relatively high exposure to the weakened commercial real estate sector, including the potential problems which remain given the sizable exposure to the emerging problems in the California real estate markets," said Larry G. Mayewski, senior vice president of Best's property/casualty division. Although the lingering underperformance of its mortgage investments are passed on to pension contract holders in the form of experience rating adjustments, "A.M. Best believes that CG Life will be challenged to maintain its competitive advantages in the highly sensitive group pension marketplace," he said.
 Connecticut General Life offers a broad range of products and has clearly established itself as a leading provider of employee benefit health care and savings plans. As a result of the ongoing problems in the national real estate markets, CG Life continues to maintain a significant volume of underperforming mortgage and real estate-related investments, which remains high relative to industry standards. However, the company has largely been insulated from the adverse financial impact of problems in this area, as a significant portion of the company's mortgage investments support its experience-rated pension products--which pass losses and gains to its contract holders.
 Connecticut General maintains a well-diversified investment portfolio, which is supported by over $13.4 billion in investment-grade bonds, cash and short-term investments (48 percent of invested assets). A.M. Best believes that this diversification, along with its generally favorable cash flows, strong profitability and its experience-rated pension liability structure provide the company with a favorable overall liquidity position. Connecticut General Life Insurance Company ranks among the 10 largest life/health insurers in the U.S. when ranked by total assets.
 Fortis Benefits Insurance Company, Woodbury, Minn., was assigned a 1993 Best's Rating of "A+" (Superior). The company's superior financial strength was affirmed and its rating level of "A+" was unchanged.
 "This rating reflects Fortis Benefits' stable earnings performance, high-quality investment portfolio, strong liquidity measures and conservative capitalization," said Larry G. Mayewski, senior vice president of Best's property/casualty division. This rating also acknowledges the strong market position that the company holds in the group medical and disability income accident and health fields, the latter of which largely reflects the acquisition of a large block of business from Mutual Benefit Life Insurance Company. A.M. Best also views favorably the support that is provided from its ultimate parent, Fortis Inc.
 Partially offsetting these strengths are the challenges which remain in fully integrating the Mutual Benefit business and administrative support functions, and the relatively concentrated operational focus which the company maintains that makes it somewhat vulnerable to potential changes that may arise from the various state and national health care reform proposals. However, A.M. Best notes that as a subsidiary of Fortis Inc., the company is a unit of a diversified insurance and financial services organization.
 The continued strong performance of Fortis Benefits' core group medical business, combined with the economies of scale that have been derived through the 1991 acquisition of the Mutual Benefit group business, have favorably contributed to the company's earnings momentum over the past two years. A.M. Best believes that Fortis Benefits' strategy toward product and market diversification will help offset the uncertainty which currently surrounds its activities in the unsettled health insurance field, and enable the favorable trends in earnings to continue in the future. The company maintains a very strong liquidity position, which is supported by $1.6 billion of investment-grade bonds, cash and short-term investments (80 percent of invested assets). Fortis Benefits maintains a modest exposure to commercial mortgage investments. However, the performance of these investments has been very favorable in relation to industry standards, with minimal problem loans reported at year-end 1992.
 Due to its strategic relationship with Fortis Benefits Insurance Company, First Fortis Life Insurance Company, Syracuse, N.Y., was assigned an initial 1993 Best's Rating of "A+" (Superior). This rating is based on the strategic role that the company holds within the Fortis Inc. group, and the fact that its product offerings and administrative activities are conducted in conjunction with Fortis Benefits Insurance Company. The company's sales activities are confined to the state of New York.
 General American Life Insurance Company, Saint Louis, Mo., was assigned a 1993 Best's Rating of "A+" (Superior). The company's superior financial strength was affirmed and its rating level of "A+" was unchanged.
 This rating assignment reflects the continued improvement in General American Life's overall earnings performance in recent years, its generally conservative operating profile, good liquidity position and adequate risk-adjusted capitalization for the present rating level. This rating also acknowledges the company's stable block of individual traditional life business, the strong earnings performance of its subsidiary operations and the significant improvement in capitalization during the first half of 1993 due to the successful initial public offering of a subsidiary company, St. Louis Reinsurance Company. Partially offsetting these strengths is the company's ongoing exposure to and underperformance of its real estate-related investments, and the decline of new life sales over the past two years.
 "Strong earnings performance of the company's traditional individual life segment, coupled with improved operating results in its combined group life and health operations in recent years, has enabled General American Life to generate net operating gains in excess of $130.6 million since year-end 1987," according to Larry G. Mayewski, senior vice president of Best's property/casualty division. "This profitability, together with the favorable impact of an initial public offering late in 1991 of GenCare, a subsidiary health maintenance organization, resulted in total capitalization (surplus funds and asset valuation reserves) advancing 79 percent between 1988 and 1992," he added. To further strengthen its surplus position and provide additional financial flexibility to grow its core operations, General American Life successfully completed an initial public offering of St. Louis Reinsurance Company, formerly a wholly owned reinsurance subsidiary.
 At year end, the company's liquidity position was supported by investment-grade bonds, cash balances and short-term securities in excess of $3.1 billion (63 percent of invested assets excluding policy loans). Although the company continues to maintain considerable exposure to commercial real estate investments, General American's improved operating and strengthened financial position will provide adequate cushion to absorb future investment write-downs and allow sufficient flexibility to expand operations, while the company also maintains a well-diversified investment portfolio and favorable overall liquidity position. General American ranks among the 50 largest life/health insurers in the United States when measured by total assets.
 General Reinsurance Group, Stamford, Conn., was assigned a 1993 Best's Rating of "A++" (Superior). The group's superior financial strength was affirmed and its rating level of "A++" was unchanged. The rating applies to the parent company, General Reinsurance Corporation, and its two subsidiaries, Genesis Insurance Company and Genesis Indemnity Company, which are assigned the rating of their parent reflecting the strategic operating and marketing relationships with their parent. These two operations operate under common ultimate ownership and management and serve as an extension of General Reinsurance Corporation, providing excess risk transfer for the alternative risk markets servicing self-insureds and captives with either admitted (Genesis Insurance) or non-admitted (Genesis Indemnity) insurance policies.
 This rating reflects the group's superior operating performance, outstanding balance sheet liquidity and superior capitalization. These positive rating factors are derived from the group's premier market position within the direct reinsurance sector and its vast array of services it provides its clients that include in addition to designing effective reinsurance programs, actuarial, claims, underwriting, legal and investment counseling. This leadership position enables the reinsurer tremendous flexibility in setting price and terms within its predominant reinsurance excess of loss book of business. In addition, the group's outstanding capitalization and total dedication to the reinsurance market provides it the opportunities to capitalize on market opportunities as well as offering unchallenged reinsurance security.
 "Despite the elevated level of catastrophe losses in 1992, the group continued produce superior underwriting results, generating a combined ratio of 105 at year end, which was 11 points better than the industry average," noted John H. Snyder, senior vice president of Best's property/casualty division. The reinsurer's long-term profitability is outstanding as evidenced by a five-year pretax return on revenue of 32 percent, which is over twice the return generated by the reinsurance sector over the period. The group's surplus position has increased by approximately 75 percent over the period from both solid operating earnings as well as substantial investment gains, despite upwards of $2 billion of dividends paid to its parent holding company. The group's capitalization is very conservative with $2 billion in premiums supported by over $3.3 billion in surplus. In addition, the group has substantial financial flexibility with a holding company debt-to-equity ratio of only 5 percent. The General Reinsurance Group is the largest professional reinsurance group in the United States with over $10.4 billion in total assets.
 In addition, General Star Indemnity Company and General Star National Insurance Company, Stamford, Conn., have been assigned 1993 Best's Ratings of "A++" (Superior). The companies' superior financial strength was affirmed and the parent rating modifiers were removed.
 The ratings reflect the companies' stand-alone superior operating performance and financial strength as well as the implicit support afforded the companies as being strategic members of the General Re family of companies. These positive rating factors are derived from the companies' prominent position and underwriting expertise within the excess and surplus lines markets. In addition, General Star Indemnity and General National, can provide either non-admitted or admitted insurance policies to meet client needs and/or state regulatory condition, which enhance management's ability to design insurance programs and retain business. Further enhancing the companies' capitalization is the underlying support and financial flexibility of their parent, General Reinsurance Corporation, which provides reinsurance protection as well as the standby commitment to provide the necessary capital to maintain the companies prudent leverage positions in response to future growth opportunities.
 The companies' underwriting performance over the last five years has been outstanding as evidenced by average combined ratios of approximately 96 for the period, which is 14 points better than industry average. Due to General Star Indemnity and General Star National's superior operating performance, which generated five-year pretax returns on revenue in excess of 40 percent, the companies' surplus positions have increased 139 percent and 111 percent, respectively, over the period. The companies maintain conservative capitalization with $112 million and $26 million in premiums supported by $210 and $68 million in surplus, respectively, at year-end 1992. The combined total assets of the companies in excess of $750 million, ranking as one of the top five excess and surplus markets.
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Date:Jun 28, 1993
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