A.M. Best Affirms American United "A+" -Superior- Rating.OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 8, 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 American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of United Life Insurance Co., Indianapolis Indianapolis (ĭn'dēənă`pəlĭs), city (1990 pop. 731,327), state capital and seat of Marion co., central Ind., on the White River; selected 1820 as the site of the state capital (which was moved there in 1825), inc. 1847. . This rating action is based on the financial strength and operating performance of the company and its strategic partner, State Life Insurance Co., its good capital position, and its diversified diversified (di·verˑ·s business profile. A.M. Best also affirmed its "A+" (Superior) rating on Indianapolis-based State Life. American United's rating also acknowledges the company's strategic alliance with Indianapolis Life Insurance Co. and Fargo, N.D. based Pioneer Mutual Life Insurance Company and the plan to organize under a mutual holding company structure. To that end, American United has taken a one-third equity position in the Indianapolis Life Group of Companies, Inc., and is committed to providing additional capital support, if necessary. A.M. Best expects the strategic alliance to ultimately provide American United with additional access to capital and better position the companies to achieve a broader presence in the insurance and 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. sectors. A.M. Best believes the alliance will especially benefit American United's individual life business, which lacks the scale of its pension business line. American United enjoys a very strong market position in the defined contribution pension arena, which is enhanced by its service capabilities and a broad product line of 457, 403(b) 401(k) and tax deferred annuities Deferred annuities Tax-advantaged life insurance products. Deferred annuities offer deferral of taxes with the option of withdrawing one's funds in the form of a life annuity. . The pension line of business, a core competency A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
The company's well-managed and loyal career agency force contributes to its sustained growth, while conservative investments, expense control and increasing economies of scale enable American United to generate consistently strong 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 . Although earnings declined in 1998, A.M. Best expects American United to generate acceptable returns and continued business expansion in its core lines--particularly individual life, where synergies with Indianapolis Life continue to develop. American United receives about one-fourth of its total premium volume from its group life and health and 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. lines of business. Although a significant contributor to revenues, group health and reinsurance produced significant statutory losses in 1998. These poor operating results reflect the company's challenges with regard to medical stop-loss stop-loss, n a general term referring to that category of coverage that provides insurance protection (reinsurance) to an employer for a self-funded plan. business and losses from certain reinsurance pools. American United has withdrawn from most pools with health risks, which should result in better reinsurance experience in 1999 and beyond. A.M. Best views American United's plans to affiliate with Indianapolis Life and form a mutual holding company positively because it provides access to a broadened product portfolio and additional capital support. While this initiative is positive, it also underscores the need for American United to raise additional capital, strengthen its individual life capabilities and better position itself to compete as a financial services organization. In addition, this affiliation has resulted in a substantial capital investment into the Indianapolis Life Group of Cos. Inc., which has reduced the financial flexibility of American United. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. |
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