[0] S&P Affirms Guardian Life Ins. Co. of American Rtgs.Business Editors NEW YORK--(BUSINESS WIRE)--Standard & Poor's Sept. 6, 2000--Standard & Poor's today affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its double-'A'-plus counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and financial strength ratings on Guardian Life Insurance Co. of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. and The Guardian Insurance & Annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. Co. (collectively, Guardian). The outlook is stable. At the same time, Standard & Poor's placed its double-'A'-minus counterparty credit and financial strength ratings on Berkshire Berkshire (bärk`shĭr, –shər, bûrk`–) or Berks (bärks, bûrks), former county, S central England. Life Insurance Co. (Berkshire Life) on CreditWatch with positive implications. These rating actions follow Guardian and Berkshire Life's announcement that their respective boards of directors have approved a proposal to merge the two companies. The transaction is a statutory merger, which is subject to approval by both companies' policyholders and the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. insurance departments.
As a result of the proposed merger, Berkshire Life policyholders will
become Guardian policyholders, and two Berkshire Life board members will
join Guardian's board.
Standard & Poor's views favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. the potential strategic and operational synergies of this merger as it relates to the combined disability income insurance operation and additional distribution capacity provided by Berkshire Life's agency system. As a result of the merger, the combined company's overall market position in individual disability income will improve to a top-five position. Operationally, the combined insurance operations will increase their distribution capacity, and the merged entity is expected to benefit from the well-established distribution relationships at both operations. Financially, Standard & Poor's expects marginal improvement in earnings because of expense synergies. Major Rating Factors: -- Extremely strong capitalization and liquidity profile. Guardian's capital is extremely strong on both absolute and risk-adjusted bases. The capital adequacy ratio, based on Standard & Poor's capital adequacy model, is extremely strong and supported by a strong balance sheet and statutory earnings performance. Standard & Poor's liquidity ratio for Guardian is extremely strong because of an asset portfolio consisting predominantly of high-quality bonds and a liability structure of mostly stable life insurance reserves. -- Conservative business, financial, and investment strategies. Guardian's asset portfolio has substantially less credit risk, interest rate risk, and underperforming assets than do its peers. Guardian's extremely strong capitalization has allowed the company to invest about 15% of assets in common stocks, which is higher than most in the industry. Performance has been very strong. -- Very strong franchise in several insurance businesses. Guardian's business position is well diversified, with a leadership position in life insurance, equity-based products, and group lines of business. The life insurance operation is a market leader because of its quality of product, career agent productivity, and very strong agent retention. Guardian has a reputation for quality and high dividends at the upper echelon of the industry. In the past few years, Guardian has established a very strong franchise in the manufacturing and distribution of variable annuities and mutual funds. The company is also well positioned in the group medical segment because of its established relationships with managed care firms in local markets. -- Very strong operating performance. On a GAAP basis, earnings have been very strong, with GAAP ROA exceeding 200 basis points (bp) in the past several years. Earnings have been supported by considerable realized capital gains and are well diversified across its individual life, group, and equity business units. Standard & Poor's placed its ratings on Berkshire Life on CreditWatch positive because it believes that as a result of the merger, Berkshire Life's policyholders will receive the same financial strength support provided to the Guardian policyholders. Standard & Poor's will continue to hold discussions with both companies' management to monitor the pending merger for potential rating impact on the Berkshire Life ratings. Guardian Life Insurance Co. of America, The Guardian Insurance & Annuity Co., and Berkshire Life Insurance Co. are Security Circle insurers, which means that they voluntarily underwent Standard & Poor's most comprehensive analysis and were assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. ratings in one of the top four categories for financial security. OUTLOOK: STABLE Standard & Poor's expects continued extremely strong capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , liquidity, and investment management. Operating performance should remain very strong, with a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). exceeding 200 bp. Life insurance sales are expected to grow annually above industry rates, with continued strong growth in revenues and earnings from equity-based products, Standard & Poor's said. -- CreditWire Copyright 2000, Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. |
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