A.M. Best Affirms A++ Rating Of Sun Life Assurance, Subsidiaries.OLDWICK, N.J.--(BUSINESS WIRE)--June 7, 1999-- A.M. Best Co. 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. the A++ (Superior) rating of Sun Life Assurance Co. of Canada, Toronto, and several of its subsidiaries. The rating is based on the consolidated financial strength and operating performance of the company and its subsidiaries, Sun Life Assurance Co. of Canada (U.S.) and Sun Life Insurance & Annuity Co. of 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 . The rating also reflects the leading market positions of many of the group's business units, impressive growth from its U.S. mutual-fund operation, 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. , geographically diversified operations and conservative investment portfolio. Offsetting these strengths are the challenges of improving the profitability of the company's U.K. operation and sustaining its market positions in Canada, primarily as a result of continued industry consolidation. However, Sun Life's plan to demutualize demutualize or -ise Verb [-izing, -ized] or -ising, -ised (of a mutual savings or life-assurance organization) to convert to a public limited company will provide increased financial flexibility, which will enable it to better pursue its growth strategies. Sun Life maintains leading market positions in a number of its business units worldwide through its insurance and noninsurance subsidiaries. The group is a leader in the Canadian pension and group life and health markets, the largest group-risk insurer in the United Kingdom, and a prominent company in the U.S. individual life, group life and health, variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. and mutual-fund markets. Its international expansion is continuing as it is the second largest provider of life insurance in the Philippines. Sun Life's U.S. mutual-fund subsidiary, Massachusetts Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , continues to record outstanding sales and impressive growth in management fees. Sun Life's operations are geographically diversified as each of its major operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (43%), the United Kingdom (30%) and Canada (27%) represent a significant proportion of the group's combined general and segregated funds Segregated Fund A type of annuity that is similar to a mutual fund, and is an insurance product and offered only by insurance companies. Notes: Most segregated funds will guarantee a specific return, anywhere from 70% to 120%, over a certain period of time (five-10 years). assets. Through these business units, the group has developed diversified sources of strong and consistent earnings due primarily to increased economies of scale within its core business segments. In 1998, however, Sun Life's earnings have been significantly affected by reserve strengthening in the United Kingdom related to guaranteed annuity options and pension mis-selling. Although the company maintains good positions in some markets in the United Kingdom, A.M. Best believes that Sun Life will be challenged to achieve substantially better returns in the United Kingdom where the company is competing with larger competitors. In addition, the company continues to address the industry-wide review requirements related to pension mis-selling and managing its interest-rate risk associated with guaranteed annuity options. Finally, A.M. Best believes that the company has been somewhat late in developing products in the United Kingdom for independent financial advisors, which have been the dominant distribution growth source within the U.K. industry. Sun Life's core earnings and subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". have enabled the company to maintain superior capital strength, which may be further enhanced through its planned demutualization Demutualization The process of changing corporate structure from a mutual fund company to some other form, such as a limited liability or corporation. Notes: This means mutual/life insurance companies convert from policyholder companies to stock companies. . The demutualization will provide broader access to capital and position the company to compete in the rapidly changing financial services sector. As a result of a competitive product line and an emphasis on customer service, the group is expected to maintain its current position in each market. However, an increasingly competitive market environment makes it difficult for Sun Life to increase its market position in the mature Canadian individual-insurance market. While the company's restructuring of its individual-agency system has reduced distribution expenses, growth will depend on the company's ability to enhance agent productivity, sustain a competitive advantage and gain additional access to higher net-worth individuals through a complementary brokerage system. As strategic subsidiaries, Sun Life Assurance Co. of Canada (U.S.), Wellesley, Mass., and Sun Life Insurance and Annuity Co. of New York had their Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. of A++ affirmed. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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