A.M. Best Affirms A Rating of Empire Life.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 27, 2000 A.M. Best Co. has 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) financial strength rating of The Empire Life Insurance Company, 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. . The rating reflects the company's 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. and stable earnings from its core individual life insurance business. The rating also considers Empire Life's wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Concordia Life Insurance Company, Toronto, which offers Empire Life additional growth opportunities and better economies of scale. Earnings from Empire Life's large, stable block of non-participating life business has enabled the company to build a strong capital base. Empire Life has had success in growing its 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, resulting in higher fee revenues. However, recent heightened competition in this market segment has resulted in a significant slow-down in sales and the growth of Empire Life's segregated funds portfolio. A.M. Best believes continued slow sales would ultimately result in lower segregated fund balances and reduced fee income, pressuring future earnings expansion. Empire Life has a niche position in the small group benefits market, where it has been active for many years. The company's marketing is enhanced with a packaged plan designed specifically for small groups and tailor-made programs for large groups. However, operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. have been reported in recent years. A.M. Best believes Empire Life will be challenged to offer competitively priced, profitable products in the small group marketplace. The life insurance market in Canada is mature, challenging Empire Life and Concordia Life to increase new premium life insurance volume. In addition, both companies will find it difficult to attract new clients for their segregated fund products, as other insurers have aggressively expanded fund options and offer more aggressive guarantees. A.M. Best also affirmed the A- (Excellent) rating of Concordia Life Insurance Company. The affirmation A solemn and formal declaration of the truth of a statement, such as an Affidavit or the actual or prospective testimony of a witness or a party that takes the place of an oath. An affirmation is also used when a person cannot take an oath because of religious convictions. is based on the financial strength and support from its parent, improved operating performance and benefits provided from a broadened product portfolio, 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 ability to sell through a separate and distinct distribution network. 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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