A.M. Best Affirms Clarica Life's Financial Strength and Debt Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 21, 2001 A.M. Best Co. has affirmed the A+ (Superior) financial strength rating of Clarica Life Insurance Co., 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. , and the A+ (Superior) financial strength rating of its principal operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Clarica Life Insurance Co. - U.S., Brookfield, Wisconsin
Brookfield is a city in Waukesha County, Wisconsin, United States. The population was 38,649 at the 2000 census, but the city's population recently exceeded 40,000 people. . In addition, the ratings on Clarica's debt and preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. have been affirmed. The ratings reflect Clarica's strong market positions in its core business lines in Canada, its well-established career agency force, improved operating performance, strong debt service capabilities and sound capitalization. Enhanced by recent acquisition activity and favorable persistency, Clarica maintains strong market positions in its three core 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. segments: retail insurance, wealth management and group insurance. Furthermore, earnings have improved significantly over the last two years, reflecting the impact of acquisitions, the return to profitability of the group insurance line, better expense management and growth in its wealth accumulation segment. A.M. Best believes the earnings and cash flow generated from Clarica's insurance business and fee income from its segregated and mutual fund businesses are sustainable and strongly support the company's long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. service capabilities. 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. Having the advantage of a large career agency distribution, the company is well positioned to remain a strong player in the Canadian market. A.M. Best believes Clarica may be challenged to increase its market position in the asset-accumulation market segment given its higher cost structure relative to larger players in the mutual fund and 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). arena. Likewise, new capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. for segregated fund business in Canada may result in greater price competition, reduced operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: and higher required capital. Nevertheless, Clarica maintains a sound capital position supporting its core businesses, which is comparable to its Canadian peers. Clarica's strengths are offset by its business concentration in Canada and lack of diversified distribution channels in its Canadian retail insurance operations, which limit sales growth. Moreover, earnings growth is constrained by the lack of significant geographic diversification as the majority of its earnings are generated from insurance and asset accumulation businesses in Canada. Over the past several years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time company has accessed the capital markets to finance acquisitions and support the growth of its core businesses. However, Clarica's leverage position remains moderate and its business lines generate steady earnings, which provide ample fixed charge coverage. Absent a major acquisition, A.M. Best expects the company to maintain financial leverage--debt plus preferred shares to total capital--at approximately 25% in the near to medium term. Clarica is one of Canada's largest life insurance companies, with reported consolidated corporate assets of C$29.7 billion and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of C$2.9 billion as of December 31, 2000. The following existing debt ratings have been affirmed: Clarica Life Insurance Co.-- -- "a+" rating on C$250 million 5.80% subordinated debentures, Series 1, due 2013 -- "a+" rating on C$150 million 6.30% subordinated debentures, Series 2, due 2028 -- "a+" rating on C$300 million 6.65% subordinated debentures, Series 3, due 2015 -- "a" rating on C$150 million non-cumulative redeemable preferred shares, Series 1 Clarica U.S. Inc.-- -- "a+" rating on(pound)125 million 7.25% subordinated guaranteed bonds, due 2004 The following financial strength ratings have been affirmed: -- Clarica Life Insurance Co. at A+ (Superior) -- Clarica Life Insurance Co. - U.S. at A+ (Superior) -- Milwaukee Life Insurance Co. at A (Excellent) 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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