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A.M. BEST RELEASES ANNUAL REVIEW OF INTERNATIONAL INSURERS

 OLDWICK, N.J. /PRNewswire/ -- The A.M. Best Company today released the 1993 Best's Ratings of 37 international property/casualty, 17 life/health and six Composite insurers, including Canada Life Assurance Company, Centre Reinsurance (Bermuda) Ltd., Chubb Insurance Company of Canada, Swiss Reinsurance Company and Zurich International (Bermuda) Ltd. Of the 60 total companies reviewed this week, 18 ratings were assigned to insurers previously not rated.
 This release is the first of three based on A.M. Best's annual review of international companies, with interim updates in Best's Insurance Management Reports and Best's Review magazine.
 The following are excerpts of brief rating rationales for 20 international insurance companies:
 -- Allstate Insurance Company of Canada, Markham, Ontario, was assigned an initial 1993 Best's Rating of "A-" (Excellent). The rating reflects management's conservative operating strategy, favorable underwriting results in its dominant book of personal automobile insurance, a high-quality investment portfolio and strong loss reserves. On June 1, 1993, it reinsured virtually all of its commercial net business in force with another insurer, which improved its leverage position and should improve future profitability.
 -- Canada Life Assurance Company, Toronto, was assigned a 1993 Best's Rating of "A++" (Superior). The company's financial strength was affirmed and its rating level of "A++" was unchanged. The rating reflects the company's conservative management, its diversified income streams, the excellent market positions of its business units, the overall good quality of the investment portfolio and the company's strong capitalization. Somewhat offsetting these strengths is the company's exposure to commercial mortgages, which are expected to continue to impact overall earnings performance.
 The company maintains strong market positions in a number of business segments. Either directly or through its subsidiaries, the insurer is a leader in the Canadian group creditor market; became the fourth largest insurer in Ireland with the acquisition of Abbey Life; ranks among the top five insurers in the United Kingdom group brokerage system; and has a strong presence in the Canadian group market, where it provides a full range of group insurance and group retirement savings products to groups and affinity groups.
 -- Centre Reinsurance (Bermuda) Limited, Hamilton, Bermuda, and its four affiliates, Centre Reinsurance Company of New York, Centre Reinsurance Limited, CentreLine Reinsurance Ltd. and Centre Reinsurance International Company, Dublin, Ireland, were assigned initial 1993 Best's Ratings of "A" (Excellent). These ratings are based on the companies' positions as the leading providers of finite risk and related products worldwide.
 Since the group's formation in 1987, capital contributions, combined with steady earnings growth, have increased surplus from its initial level of $250 million to an estimated $1 billion at June 30, 1992. This makes Centre Re one of the world's largest reinsurers. The group is very well capitalized and is approximately 75 percent owned by the Zurich Insurance Company of Switzerland. The group's profitability has been excellent to date with a steady growth in earnings from $12 million in 1988 to $56 million in 1992.
 -- Chubb Insurance Company of Canada, Toronto, and Chubb Insurance Company of Europe S.A., Brussels, Belgium, have been assigned 1993 Best's Ratings of "A++" (Superior). Both companies' superior financial strength was affirmed and their rating level was raised to "A++" from "A+."
 The ratings reflect their strategic role of underwriting the Canadian and European business, respectively, within the overall operations of the Federal Insurance Company of the United States, the lead company of the Chubb Group of Insurance Companies. The ratings also reflect management's conservative operating strategy, outstanding financial performance and very strong capitalization. In addition, the group has a portfolio of high-quality investments, strong loss reserves and excellent reinsurance protection.
 The Chubb Group is one of a few large property/casualty groups that continues to produce outstanding underwriting results with an average combined ratio over the past five years that has outperformed the industry by nearly 10 points. These superior underwriting results are derived from the group's favorable loss experience within its upscale personal property and specialized commercial lines. They also reflect the group's disciplined underwriting approach and adherence to sound operating fundamentals, including its commitment to maintaining adequate loss reserves and pricing throughout an underwriting cycle.
 -- Confederation Life Insurance Company, Toronto, 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 downgraded from "A+" to "A." This rating reflects the company's diversified income streams, the strong market positions of its business units, favorable initiatives implemented by the company's new senior management and improving capitalization. Offsetting these strengths is the expectation that the company's earnings performance will continue to be pressured from continuing delinquencies within the commercial mortgage portfolio and from the affiliated trust company.
 The company maintains leading market positions in Canada, the United States and the United Kingdom. In Canada, the company maintains a dominant position in the large case Canadian group insurance market and in group pensions; in the United Kingdom, it is the second largest pooled pension fund manager and delivers unit-linked life products through a strong career agency force; and in the United States, operations are focused on marketing individual and group life and annuity products for estate planning needs and corporate pension plans.
 Overall mortgage performance within the insurance company portfolio has been generally favorable to industry experience. However, given the large size of the mortgage portfolio, delinquencies are relatively high when related to total capital. In addition, delinquencies will likely not decline in the next two years, given the company's exposure to loans in Ontario and California. Although asset writedowns will continue to impact overall earnings performance for the next several years, A.M. Best believes that the company has taken measures to improve earnings from the modest levels reported in the past two years.
 -- Crown Life Insurance Company, Toronto, was assigned a 1993 Best's Rating of "A-" (Excellent). The company's excellent financial strength was affirmed and its rating level of "A-" was unchanged. This rating reflects the company's good capitalization, the expense efficiencies from the company's relocation to Regina, Saskatchewan, the good quality of the bond portfolio and its reasonable market positions in the Canadian individual, pension, and reinsurance segments. These strengths are offset by the company's ongoing exposure to commercial mortgages and real estate and the uncertainties regarding the company's change in strategic direction within the U.S. individual life marketplace.
 Crown Life is presently undergoing a major transition, including the relocation of its head office to Regina, the redirection of its United States individual life segment, a strategy to improve overall investment quality and a major plan to shift away from marketing capital intensive products and toward fee-based products such as variable life and variable annuities. During this transition, A.M. Best expects that possible additional asset writedowns will be offset by Crown Life's more stable Canadian life insurance operations, as well as the revenue stream from Crown Life's existing book of United States individual life business.
 However, Crown Life's exposure to commercial mortgages and real estate (much of which was acquired through foreclosure) represents about 50 percent of the investment portfolio. The commercial mortgage portfolio has experienced a high level of delinquencies, and is susceptible to continued delinquencies, particularly in California, which comprises about 20 percent of the United States commercial mortgage portfolio. Additionally, the planned withdrawal from the GIC market and the significant amounts of GIC maturities in the next few years will make it difficult for Crown Life to reduce its exposure to commercial real estate.
 -- Gerling Global Life Insurance Company, Toronto, has received an initial 1993 Best's Rating of "A" (Excellent). This rating assignment reflects the insurer's position as a strategic subsidiary of Gerling- Konzern Versicherungs Beteiligungs AG, Cologne, Germany, as well as its strong capitalization, high-quality investment portfolio and improving levels of profitability.
 Gerling Global Life's investment portfolio is of good quality, with only a modest amount of bonds in lower quality instruments. In addition, the company's mortgage portfolio presents minimal risk since the entire portfolio is insured by the Canada Mortgage and Housing Corp. The company does not invest in commercial mortgages or real estate.
 The rating also acknowledges the pressures facing the insurer as it expands its niche position in the reinsurance market, where a large portion of its business consists of U.S. non-proportional accident and health risks. Offsetting this concern, though, is the company's success during the past several years in diversifying and improving the quality of its reinsurance risks.
 -- Great-West Life Assurance Company (GWL), Winnipeg, Manitoba, 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. The rating reflects the company's diversified sources of earnings in both Canada and the United States, its strong market positions, a high-quality bond portfolio, excellent consolidated capitalization and the support and strength of the majority owner, Power Financial Corporation of Canada. Somewhat offsetting these strengths is the expectation that earnings performance will continue to be pressured from continuing delinquencies within the commercial mortgage portfolio.
 Consolidated capitalization remains excellent and is anticipated to be maintained at sound levels through both internal capital generation and through external capital raising efforts. Although internal capital growth has been pressured through the aggressive measures taken by management to conservatively value the commercial mortgage portfolios in both Canada and in the United States, A.M. Best believes that these measures have reduced the loss potential from the consolidated mortgage and real estate investments. Nevertheless, the continued exposure to the real estate markets will likely continue to have a dampening effect on earnings due to the companies' exposures to the California, Quebec and Ontario real estate markets.
 -- Hartford Insurance Company of Canada, Willowdale, Ontario, was assigned an initial 1993 Best's Rating of "A+" (Superior). The rating reflects the company's strategic role within the overall operations of the ultimate parent organization, Hartford Fire Insurance Company, Hartford, Conn., a member of the ITT Hartford Insurance Group. The rating also reflects the consolidated group's strong capitalization, stable underwriting results, its competitive advantage derived from its strong personal, commercial and specialty lines business. The Canadian subsidiary participates in an intercompany reinsurance arrangement with the Hartford Fire Insurance Company and its property/casualty subsidiaries.
 -- The Manufacturers Life Insurance Company, Toronto, 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. The rating reflects the company's geographically diversified sources of income, its strong market presence, overall conservative quality of the investment portfolio, anticipated improvement in earnings performance and strong capitalization levels. Somewhat offsetting these strengths are the company's exposures to mortgage loans, which significantly impacted overall earnings performance in 1992 and the company's expansion into banking through Manulife Bank of Canada.
 The consolidated investment portfolio remains of good quality. Historically, overall investment performance has been favorable; however, in 1992 the company experienced substantial writedowns in the mortgage and trust portfolios, resulting in net income dropping from $200 million in 1991 to $76 million in 1992. In an effort to address expected future investment writedowns on earnings, the company established significant reserves for expected mortgage losses. Despite the deterioration in earnings performance and the substantial increase in investment losses, consolidated capitalization levels remain strong.
 -- Munich Reinsurance Company (Canadian Branch) and Munich Reinsurance Company of Canada, both of Toronto, have been assigned 1993 Best's Ratings of "A+" (Superior). Munich Reinsurance Company's rating was affirmed, while Munich Reinsurance Company of Canada received an initial 1993 Best's Rating. These reinsurers are the branch office and a Canadian subsidiary, respectively, of the Munich Reinsurance Company, Munich, Germany.
 The initial rating assigned to the Canadian subsidiary reflects its superior financial strength and the support of its parent through its Canadian branch, which reinsures a significant amount of the company's book of business. Although the Munich Re group's historic profitability been under strain in the past four years, its balance-sheet strength and strong flow of investment funds has enabled it to modestly add to policyholders' surplus throughout the period while maintaining a very conservative reserving posture.
 -- NAC Reinsurance Corporation (Canadian Branch), Willowdale, Ontario, was assigned an initial 1993 rating of "A" (Excellent). The rating reflects its strategic role within the overall operations of the NAC Reinsurance Corporation of the United States, the lead company of the NAC Re Group, and supports the group's excellent capitalization, good operating performance and strong market position in the broker reinsurance sector. In addition, the issuance of 8 percent seven-year senior notes, as well as the sale of 5.25 percent 10-year convertible subordinated debentures, have raised $200 million and increased the group's 1992 surplus 67 percent to $384 million. The parent company's debt-to-equity ratio remains a modest 65 percent.
 -- North American Life Assurance Company, Toronto, 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 downgraded from "A+" to "A." The rating reflects the company's strong position in the Canadian association group market, the favorable outlook for its variable annuity subsidiary in the United States, the company's favorable surplus position, and the overall good quality of the bond portfolio. Offsetting these strengths are the company's modest earnings levels, the increased competitive challenges facing the company's individual life segment, and potential earnings pressures from the company's commercial mortgage exposure.
 Earnings in recent years have been trending downward, reflecting restructuring charges and adverse underwriting experience. Figures in 1992 earnings declined significantly, primarily as a result of asset writedowns from declining real estate values. Earnings are expected to gradually improve over the next several years, as the company continues its expense reduction strategies. In addition, the company's large exposure to Ontario commercial mortgages exposes the company to potentially more asset writedowns in the future.
 -- Pearl Assurance plc, Petersborough, United Kingdom, 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 the company's conservative operating strategy, strong balance sheet and capitalization.
 Significant improvement has been recorded on the general business over the last two years following a very poor experience in 1990, which caused an overall operating loss that year. The profitable core book of long-term business and growing net investment income have provided for stockholder dividends and a more than 40 percent increase in capital and surplus over the last five years to approach GBP 200 million at the end of 1992. During the same period, the company's total assets have increased by two-thirds to GBP 9.7 billion at the close of last year.
 -- St. Paul Fire and Marine Insurance Company (Canadian Branch), Toronto, was assigned an initial 1993 Best's Rating of "A+" (Superior). The rating reflects its strategic role within the overall operations of the St. Paul Fire & Marine Insurance Company, St. Paul, Minn., the lead company of the St. Paul Companies Inc., as well as the group's superior financial strength. Also recognized is the company's conservative operating strategy, underwriting expertise in medical malpractice and specialty commercial lines marketplace, and extremely strong capitalization.
 The group operates with very conservative leverage, with $2.9 billion of net premiums written supported by $1.6 billion in surplus, further enhanced by very strong loss reserves with substantial embedded economic value as well as redundancies recognized in the last several years.
 -- Members of the Sun Alliance Group, London, were assigned a 1993 Best's Rating of "A-" (Excellent). The group's excellent financial strength was affirmed and its rating level was lowered from "A" to "A-." This rating is assigned to certain U.K. members of the group reflecting their deed of mutual guarantee on general business.
 This rating assignment reflects the group's lackluster operating performance in recent years, driven largely by the current recession in the United Kingdom accompanied by numerous business failures and virtual collapse of the housing market, which have generated substantial mortgage indemnity losses. The resulting decline in capital and surplus has raised underwriting leverage to an above average level. Gains from the group's sizable stock investments have served to mitigate underwriting losses, however, they present some downside risk.
 -- Sun Life Assurance Company of Canada, Toronto, 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. The rating reflects the company's diversified sources of income, the excellent market positions of its business units, the overall conservative investment portfolio, the strong level of capitalization and conservative management. Somewhat offsetting these strengths are the company's exposures to mortgage loans, which are expected to continue to impact overall earnings performance.
 Sun Life Assurance Company of Canada maintains leading market positions in a number of its business units. The company is a leader in the Canadian pension and group life and health markets; is the largest group life insurer in the United Kingdom; and is a prominent company in the United States individual life market, where it specializes in estate planning products.
 The overall quality of the investment portfolio has contributed to Sun Life's marketing strengths. The bond portfolio is of good quality and the performance of the mortgage portfolio has generally been better than that of its principal competitors. However, mortgage delinquencies are expected to rise given the large amount of mortgage maturities within the next several years, as well as the exposure of the consolidated mortgage portfolio to properties in California and Ontario. A.M. Best believes that mortgage writedowns will continue to impact Sun Life's overall earnings performance with the anticipation that earnings will be flat to modestly declining in the short-term. However, the overall strength of the company's core earnings will continue to allow Sun Life to maintain its superior capital strength.
 -- The Swiss Reinsurance Company, Zurich, Switzerland, 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. The company, one of the world's largest reinsurance organizations, is well positioned to continue its prominent position in the world reinsurance markets. Although the company's historic profitability has been under strain in the past two years, its balance- sheet strength and strong flow of investment funds have enabled it to modestly add to policyholders' surplus in both years, while maintaining a very conservative reserving posture.
 The rating reflects the company's position as one of the world's leading reinsurers along with management's conservative operating strategy, strong financial performance and excellent capitalization, taking into account the value of a number of "hidden values" brought about by conservative Swiss accounting practices, and a regulatory climate that encourages that strong reserves be maintained. Offsetting these positive rating factors is the depressed operating performance in the past few years as a result of the elevated level of catastrophe losses due to natural disasters.
 -- Toro Assicurazioni, Turin, Italy, has been removed from its "Under Review" status and its Best's Rating of "A" (Excellent) has been affirmed.
 In early 1993, selected management changes were made by the company's board after an officer and a director were investigated for possible unlawful activities when they were employed, prior to joining the insurer, at associated Fiat companies under the wide-spread Italian corruption scandal. To provide management continuity and leadership, the company's vice chairman was appointed to the position of president and chief executive officer during the first quarter of 1993 with the balance of the staff remaining intact. During 1992, the company continued to report improved operational and financial results with before tax operating income advancing threefold. The company maintains a conservative leverage position and its liquidity ratios remain favorable.
 -- Zurich International (Bermuda) Limited, Hamilton, Bermuda, has been assigned an initial 1993 Best's Rating of "A" (Excellent). The rating reflects the company's strategic role in the finite risk reinsurance and its close ties to its sister company, Centre Reinsurance (Bermuda) Limited.
 A number of the senior officers of the company are also officers of Centre Re and many of the companies' functions, such as underwriting, claims and actuarial, are integrated. Centre Re is one of the world's largest reinsurers and is very well capitalized. It is approximately 75 percent owned by the Zurich Insurance Company of Switzerland, while Zurich International is wholly owned by Zurich, a global insurer and reinsurer operating in more than 40 countries with more than US$5 billion in capital.
 Complete expanded rating rationales may be obtained, as well as a copy of the International Rating Monitor, by contacting the name and number below.
 -0- 10/18/93
 /CONTACT: Rhonda J. Ruch of A.M. Best Company, 908-439-2200, ext. 5684/


CO: A.M. Best Company ST: New Jersey IN: INS SU: RTG

TW -- NY060 -- 3435 10/18/93 13:36 EDT
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