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A.M. BEST ASSIGNS INITIAL LETTER RATINGS TO THE INTEGRITY COMPANIES

 OLDWICK, N.J., Nov. 29 /PRNewswire/ -- Effective immediately, A.M. Best Company has changed the 1993 Best's Ratings of Integrity Life Insurance Company and National Integrity Life Insurance Company (The Integrity Companies), both of New York, from NA-3 (Insufficient Operating Experience) to an initial Best's Rating of "A-" (Excellent). This rating action follows the recent sale of these companies by the National Mutual Life Association of Australasia, Ltd., an Australian- based financial services group, to ARM Financial Group, Inc., Louisville, Ken. Additionally, this rating decision takes into consideration the successful completion of a public offering of two million shares of cumulative perpetual preferred stock, which raised $50 million in new equity.
 The "A-" (Excellent) Best's Rating for both insurers is based on the companies' high-quality balance sheets, innovative product development and the disciplined asset/liability management skills that the buying group brings to the organizations. In addition, the rating reflects the access to capital markets and the increased financial flexibility that are available to the companies through an affiliation with Morgan Stanley Leveraged Equity Fund II's common equity investment in the companies. Also noted in the rating is the increased efficiencies that will be achieved in the consolidation of certain of the companies' operating and administrative support functions, which is expected to contribute to greater and more stable earnings in the future. Partially offsetting these favorable items are the challenges inherent in this transaction with respect to maintaining distribution and customer loyalty along with the hurdles the companies will likely have in improving profitability in their highly competitive marketplace.
 ARM Financial Group, Inc. was established by Analytical Risk Management, L.P. (ARM), a Kentucky-based limited partnership formed in 1992, and The Morgan Stanley Leveraged Equity Fund II, L.P. (MSLEFII) to serve as the holding company to acquire the Integrity Companies. Financing of the transaction was completed through a combination of private common equity financing, bank financing and a preferred stock public offering. The common stock portion will represent $70 million, of which approximately 88 percent will be owned by the MSLEFII, while the remaining 12 percent will be owned by ARM, various members of ARM Financial Group management and employees. In addition to the preferred stock noted above, the transaction financing includes $40 million of bank debt.
 The companies' business activities have been and will continue to be principally focused on the marketing and sales of accumulation type products that are distributed through banks, stockbrokers and other independent agents. As of Dec. 31, 1992, the Integrity Companies on a combined basis had nearly $2 billion in invested assets of which approximately 68 percent were in investment-grade bond holdings. Immediately following the closing of this transaction, over 97 percent of invested assets are investment grade.
 -0- 11/29/93
 /CONTACT: Rhonda J. Ruch of A.M. Best Company, 908-439-2200, Ext. 5684/


CO: Integrity Life Insurance Company; National Integrity Insurance
 Company ST: New Jersey IN: INS SU: RTG


JG -- NY026 -- 8174 11/29/93 09:56 EST
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Publication:PR Newswire
Date:Nov 29, 1993
Words:496
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