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A.M. BEST ISSUES 490 RATINGS IN 13TH WEEKLY RELEASE

 OLDWICK, N.J., June 28 /PRNewswire/ -- The A.M. Best Company today released the 13th edition of its 1993 Best's Rating Monitor. Best's Ratings were assigned to 346 property/casualty companies and 144 life/health firms, including Aetna Life and Casualty Group (property/casualty), Aetna Life Insurance Company, General Reinsurance Group, Monumental Life Insurance Company, Munich Reinsurance Group and Reliance Insurance Group.
 Based on the evaluation of year-end 1992 financial results and subsequent relevant events, Best's Ratings will be released on a weekly basis through the beginning of July. To date Best's Ratings have been assigned to 1,944 property/casualty companies and 1,149 life/health insurers. Best's Ratings are continuously monitored throughout the year with formal rating reviews performed on six-month and nine-month financial results.
 Rating rationales for 10 property/casualty and 10 life/health groups are listed below:
 Aetna Life and Casualty Group (property/casualty), Hartford, Conn., was assigned a 1993 Best's Rating of "A" (Excellent). The group's excellent financial strength was affirmed and its rating level of "A" was unchanged. This rating applies to the group's parent company, Aetna Life and Casualty Company, the six members and two affiliates of the Aetna Commercial Lines Pool, led by the Aetna Casualty & Surety Company; and the five members of the Aetna Personal Lines Pool, led by The Standard Fire Insurance Company.
 The Aetna Life and Casualty Company and its subsidiaries collectively rank as the eighth largest property/casualty underwriter in the country, with $5.0 billion in net premiums supported by $4.5 billion in surplus at year-end 1992. Affirmation of the property/casualty ratings reflects, among other factors detailed below, planned capital support to be provided by the parent holding company to insulate the two property/casualty intercompany pools from dividend pressures from the parent in the near future or from having to fund the sizable exposures to problem mortgage loans held by its life/health affiliates.
 In that regard, Aetna Life and Casualty Company plans to suspend internal dividends from the property/casualty operations in 1993 and 1994 following the extraordinary dividend of $1.1 billion paid to the parent from the Commercial Lines Pool in November 1992. This dividend was associated with proceeds generated from the sale of American Reinsurance Company. Subsequent to the sale, the parent contributed $500 million of the proceeds into the life/health group to further bolster its capital base to support its business expansion strategies as well as the increased level of problem mortgages. Two-thirds of the remaining $600 million of sale proceeds, which continue to be held at the holding company, combined with Aetna's recently announced $500 million shelf registration, provides the holding company additional financial flexibility to pay external stockholder dividends through 1994. In addition, subject to various approvals, Aetna plans to re-allocate $300 million of capital from the Personal Lines Pool to the Commercial Lines Pool in the third quarter to bring their respective capital resources more in line with the underwriting commitments and asset exposures.
 "Aetna's Personal Lines Pool rating affirmation reflects management's refocused personal lines underwriting strategies, its strong market recognition and presence in the Northeast, and its good capitalization," according to John H. Snyder, senior vice president of Best's property/casualty division. These positive rating factors are derived from business and expense reduction initiatives started in 1991 geared towards withdrawing from, or reducing, its exposure to personal automobile insurance in states deemed to have poor operating or regulatory environments. These initiatives have positioned Aetna as a more focused, regional provider of automobile insurance.
 Concurrently, Aetna has established a separate market identity for its homeowners business, and contrary to its automobile strategy, is committed on a national basis. These positive rating factors are offset somewhat by the adverse market impact that the automobile downsizing actions are having on its core homeowners book. However, A.M. Best expects that these impacts will subside as Aetna's Personal Lines Pool maintains its commitment to its independent agents and emerges from this transition period. Because of its ongoing downsizing initiatives, the Personal Lines Pool maintains very strong capitalization, with $1.6 billion of premiums, down nearly 30 percent from prior year, supported by $883 million in surplus at year-end 1992.
 Aetna's Commercial Lines Pool rating affirmation reflects the commercial operation's strong market presence within the national account and mid-sized account markets, including its very profitable bond business, the positive long-term impacts stemming from its business and expense reduction initiatives, its strong loss reserve position with substantial imbedded economic value, and its good capitalization after giving effect to the planned capital infusion noted above. These positive rating factors are derived from the significant business reductions taken in its unprofitable workers' compensation line and its diversified commercial customer base ranging from small business accounts to the large commercial national accounts. These positive rating factors are offset somewhat by the uncertainties associated with its ongoing environmental and asbestos reserve development, as evidenced by nearly $450 million of reserve strengthening in 1992, and its aggressive investment leverage, with 135 percent of surplus invested in mortgage loans. The Commercial Lines Pool's net premiums of $3.3 billion were supported by $1.2 billion of surplus at year-end 1992, down nearly 50 percent from prior year.
 Aetna Life Insurance Company, Hartford, Conn., was assigned a 1993 Best's Rating of "A" (Excellent). The company's financial strength was downgraded from "Superior" to "Excellent" and its rating level was reduced from "A+" to "A."
 This rating reflects the company's prominent position in the employee benefit marketplace, the solid earnings of the group life and health lines of business, favorable liquidity and strengthened capitalization. In addition, the rating acknowledges Aetna Life's conservative management strategies and its expertise in asset/liability management.
 Partially mitigating these strengths is the weakened performance of Aetna Life's commercial mortgage loan portfolio and the company's ongoing exposure to continued deterioration and underperformance in the real estate market. Although Aetna Life has indicated that the level of problem mortgage loans has stabilized, the company will continue to be challenged to maintain and improve overall earnings performance due to losses on its group pension business associated with reduced investment income from underperforming mortgages. While real estate will continue to pressure the company in the near term, A.M. Best views favorably the company's strengthened capitalization and expense reduction efforts which provide it with improved financial flexibility to expand its core operations.
 In addition, "this rating change partially reflects A.M. Best's increased focus on the pressures and challenges confronted by life/health insurers in improving profitability and managing significant investment concentration risks," according to Larry G. Mayewski, senior vice president of Best's life/health division. "These issues, particularly with regards to real estate, have played a role in the downgradings of a modest number of life/health insurers in recent months," he added.
 In addition, Aetna Life Insurance and Annuity Company (ALIAC), Hartford, Conn., 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 company's strong position in the tax-deferred annuity market, its conservative management strategies, excellent capitalization, outstanding asset quality and favorable profitability. In addition, the rating acknowledges ALIAC's asset/liability management expertise and the commitment of the Aetna organization to maintain the insurer's very conservative investment risk profile. At year-end 1992, bonds rated below-investment-grade represented a nominal 3 percent of general account assets. ALIAC maintains virtually no direct exposure to commercial mortgage loans or real estate.
 Amerisure Companies, Detroit, was assigned a 1993 Best's Rating of "A-" (Excellent). The group's excellent financial strength was affirmed and the rating level of "A-" was unchanged. The rating applies to the group's four intercompany pool members, led by Michigan Mutual Insurance Company, and one company that is reinsured by a pool member.
 This rating reflects the group's conservative operating strategy, improved underwriting performance, commitment to loss reserve adequacy, and sound capitalization following several recent capital actions taken by the group. These positive rating factors are derived by Amerisure's balanced book of personal and mainstreet commercial lines business largely written in the midwest, a favorable operating and regulatory environment, as well as management's successful execution of a corrective action plan initiated several years ago. In addition, several recent events have bolstered surplus by nearly $25 million in the second quarter of 1993, which secured its financial strength and provides financial flexibility to support its controlled growth strategies. These events included a $7 million surplus note secured with one of their lead reinsurers, an $11 million refund from a funded reinsurance contract and a $6 million federal tax refund.
 These positive rating factors are offset somewhat by the group's poor profitability in recent years, its high underwriting leverage, despite nearly a 30 percent reduction in business wrings since 1987, and the group's relatively low investment yields that will continue in the future given its substantial sell-off and repositioning of its bond portfolio in 1991 and 1992.
 Excluding $40 million of conservative reserve strengthening measures taken by management on its predominant workers' compensation business in 1992, the group generated strong accident year results, reflective of its long-term corrective plan," said John H. Snyder, senior vice president of Best's property/casualty division. This plan included downsizing and withdrawal from unprofitable states, reunderwriting and reorganization of the personal lines business, renewed pricing discipline with sizable rate increases and significant reserve strengthening.
 Amerisure's net and gross underwriting leverage is high relative to its peers; however, it has gradually improved in recent years and is tempered by its strengthened reserves and its sizable risk-free service carrier operation. Amerisure's renewed underwriting focus, its significant balance sheet strengthening, and the additional capital support secured in the second quarter has positioned the group for further improvement in its future operating results. Amerisure ranks among the top 100 property/casualty underwriters in the U.S. with $391 million in net writings and $243 million in surplus. A.M. Best estimates that Amerisure's surplus exceeded $270 million at June 30, 1993.
 Atlantic Mutual Companies, New York, was assigned a 1993 Best's Rating of "A" (Excellent). The group's excellent financial strength was affirmed and its rating level of "A" was unchanged. The rating applies to the consolidated results of Atlantic Mutual Insurance Company, its two subsidiary companies, one of which pools with Atlantic Mutual and Atlantic Lloyd's which is reinsured by the pool.
 "This rating reflects the group's ability to generate earnings and increase surplus, despite disappointing financial results in recent years, a strong balance sheet with over $1.1 billion invested in a high- quality bond portfolio and good capital position," said John H. Snyder, senior vice president of Best's property/casualty division. Operating results in recent years have been unprofitable with a five-year operating ratio of 101 recorded for the period. However, when credit is given for the $120 million of capital gains generated by the group's large investment portfolio, total return measures are much more favorable and have led to a 20 percent increase in surplus since 1987. Corrective steps are being taken to address poor operating results and include a reduction in certain books of business and premium volume in states deemed to be unprofitable, while at the same time emphasizing more attractive market segments and taking rate increases where possible. The group also reduced its catastrophe exposure by discontinuing the operations of its assumed reinsurance subsidiary, Atlantic Re, during the first quarter of 1993 as well as increasing its reinsurance protection with a 40 percent quota share reinsurance arrangement for personal lines property exposures.
 A favorable capital position has been maintained with $281 million of surplus supporting $575 million of net writings. This position is further enhanced by the very strong loss reserves and a liquid balance sheet containing a $1.1 billion high-quality bond portfolio.
 -0- 6/28/93
 /FIRST ADD TO FOLLOW/
 /CONTACT: Rhonda J. Ruch of A.M. Best Company, 908-439-2200 ext. 5684/


CO: ST: IN: INS SU: RTG TS -- NY040 -- 6233 06/28/93 12:19 EDT
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