A.M. Best Affirms A -Excellent- Rating Of Empire Life Insurance Co.OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 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 (Excellent) rating of Empire Life Insurance Co., Kingston, Ontario Kingston, Ontario, is a Canadian city located at the eastern end of Lake Ontario, where the lake runs into the St. Lawrence River and the Thousand Islands begin. Kingston is the county seat of Frontenac County. , Canada. The rating reflects the company's solid 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. , consistent profitability and good market position in the 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). business, in which the company's focus is on financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against . A.M. Best also views Empire Life's acquisition of Concordia Life Insurance Co., (formerly Colonia Life Insurance Co.), Toronto, favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. , as additional cost savings result in better economies of scale in both companies. A.M. Best also affirmed Concordia Life's A- (Excellent) rating. The rating is based on the financial strength and continued support from the parent organization, Concordia Life's strong universal life underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. expertise and the strategic role Concordia Life offers Empire Life through an expansion of product portfolio and the ability to sell through a separate and distinct distribution network. Due to Concordia Life's improved operating performance and the financial strength of Concordia Life's parent, Empire Life, A.M. Best has placed a positive outlook on its rating. Earnings from Empire Life's large, stable block of non-participating life business has enabled the company to build a very strong capital base over the years. In addition, despite tightened margins in the fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. line, Empire Life has enjoyed considerable success in growing its segregated funds portfolio. Sales growth and historical market appreciation have resulted in increased fund management fees. Although Empire Life is consistently profitable, operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before have been impacted by continual lower levels of profitability in its group life and health business. Although Concordia's profitability still remains below A.M. Best expectations, the company is experiencing modest improvement in its operating performance, driven mainly by its core individual life insurance business. In addition, Concordia has begun to experience modest growth in its individual life insurance business. The life insurance market in Canada is mature, both companies will find it difficult to increase new premium life insurance volume. In addition, both companies will be challenged to attract new client prospects for their segregated fund products, as other insurers have aggressively expanded their fund options, including those managed by fund managers. Furthermore, A.M. Best believes Empire Life will be challenged to offer competitively priced small group products on a profitable basis as competition in the small group market intensifies, particularly if large insurers accelerate their focus on small employers. Future growth in this line may be hampered by the consolidation within the market. 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. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion