A.M. Best Affirms A+ Rating On Clarica Life Insurance.OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 17, 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 Clarica Life Insurance Co., (formerly the Mutual Life Assurance Company of Canada), Waterloo, Ontario Coordinates: Waterloo is a city in Ontario, Canada. It is the smallest of the three cities in the Regional Municipality of Waterloo, and is adjacent to the larger city of Kitchener. . The rating reflects Clarica's strong franchise in the Canadian individual life insurance market, its well established career agency force and good risk-adjusted 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. . It also acknowledges the successful completion of the company's 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. process, the added financial flexibility and access to capital this provides and the synergies achieved through the integration of Metropolitan Life Insurance Co.'s Canadian business Canadian Business is the longest-publishing business magazine in Canada. It was founded in 1928 as The Commerce of the Nation, the organ of the Canadian Chamber of Commerce. The magazine was renamed Canadian Business in 1933. . The company's Canadian individual insurance operation is very strong and, with the acquisition of Metropolitan Life Insurance Co.'s Canadian business, Clarica holds the second-largest share of this market. Its market position has benefited from its levelized agent commission structure that contributes to above-average policy retention rates, good new business growth and improved agency service. Although the Canadian individual life insurance market offers little opportunity for growth and is increasingly competitive, Clarica's participation in the consolidation of the Canadian insurance industry has enabled it to significantly increase market share and economies of scale. As a low-cost provider with a large distribution system, the company is well positioned to remain a strong player in the Canadian market. In addition to traditional life insurance, Clarica remains a significant player in the employee benefits, pension and 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. market segments with expanding segregated fund 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). and mutual fund portfolios which, together, continue to achieve strong growth in both sales and market appreciation. Clarica's position in fund-based business has been enhanced by alliances with outside fund managers, enabling the company to provide more choice and name recognition in its fund offerings, resulting in higher sales volume and a stronger market position in recent years. Clarica's profitable operations, generally conservative investment strategy and large, less capital intensive market-based businesses, have contributed to the maintenance of a good risk-adjusted capital position. However, A.M. Best notes that, as a result of recent acquisition activity, Clarica's increased use of 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". has resulted in a more aggressive capital structure. As a result of this increased leverage, A.M. Best views the completion of the demutualization process as favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. , since it provides increased financial flexibility and enhances the company's access to the capital markets. Although A.M. Best views Clarica's demutualization positively, it also believes Clarica may be challenged to effectively employ its capital to achieve the operating performance expected of a well-managed stock life insurance company. A.M. Best further anticipates a transition period for the company's business to shift from the mutual pricing and cost structure to a stock company structure. In addition, Clarica will need to re-establish a marketing presence utilizing the Clarica brand name. Clarica remains challenged to achieve significant expansion outside the Canadian market, where it enjoys an expanding domestic presence. A.M. Best views such expansion as necessary to reduce the company's reliance on the highly competitive Canadian market for growth. Through its U.S. subsidiary, Clarica Life Insurance Company-U.S. (formerly TMG TMG - TransMoGrifier. An early language for writing recursive descent compilers. It was macroed from the IBM 1604 to the IBM 709 to the IBM 7094 to the GE-635, where it was used by McIlroy and Morris to write the EPL compiler for Multics. Life Insurance Co.), Clarica maintains a niche position in the U.S. market. When combined with Clarica's growing presence in the reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. marketplace, the U.S. operations contribute about 15% to consolidated earnings. However, Clarica has not been able to find good candidates for acquisition 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. , due in part, to the high cost of acquisitions. The ability to access the capital markets will enable the company to further pursue candidates and enable it to better achieve its growth objectives in both the United States and Canada. A.M. Best has affirmed the A+ rating of the Clarica Life Insurance Co.-U.S., Brookfield, Wisc. The action reflects the company's role as a strategic subsidiary and the U.S. marketing arm of Clarica. The A (Excellent) rating of Milwaukee Life Insurance Co. was also affirmed. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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