A.M. Best Affirms Phoenix Home Life And Subsidiaries at A -Excellent-.OLDWICK, N.J.--(BUSINESS WIRE)--July 21, 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 Phoenix Home Life Mutual Insurance Co., Hartford, Conn. The rating reflects the company's strong position in the upper-income individual life market and the strength, quality and improving diversity of distribution sources it has developed to sustain its presence in the upper-income market. It also recognizes the progress Phoenix Home has made toward becoming a more focused and well-balanced 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. organization. Merger and acquisition activity in the company's core individual life and asset-management businesses has lowered unit costs. These transactions, together with the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of ancillary businesses and an expansion of its products and services, has helped to better position the company to compete more effectively in its chosen markets. Additionally, Phoenix Home's emphasis on less capital-intensive products and services and the sale of real estate holdings and certain subsidiaries have improved the company's risk-adjusted capital and asset quality. Offsetting these strengths are the challenges Phoenix Home faces in increasing its operating returns and building alternative distribution capacity for its variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. and investment management operations. A.M. Best views these factors as vital to the development of scale, which has become increasingly important to remaining competitive in these markets. Consistent with the industry in general, the company has experienced modest growth in its core participating life insurance business. Operating gains from this line have been depressed in recent years as declining interest rates have led to falling investment yields, while the company has continued to maintain one of the highest dividend scales in the industry. A reduction in the company's dividend scale that became effective Jan. 1, 1999, improves its earnings potential; however, A.M. Best believes competition in the upscale market for traditional products will continue to challenge business growth and profitability. The modest earnings growth in its traditional life business has constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. the company's capital accumulation Most generally, the accumulation of capital refers simply to the gathering or amassment of objects of value; the increase in wealth; or the creation of wealth. Capital can be generally defined as assets invested for profit. . In response, Phoenix Home has developed strategies for capital conservation and generation. The first is the sale of ancillary subsidiaries and businesses. Proceeds from these sales have reduced debt at Phoenix Home's downstream holding company, increased capital and reduced goodwill on Phoenix Home's balance sheet. The second strategy has been an expansion of the company's portfolio of products and services that emphasize less capital-intensive product lines, such as variable life and annuities. The third strategy has been the establishment of businesses under separate stock subsidiaries. These subsidiaries could serve as future sources of capital through initial public offerings. All of these strategies provide the opportunity to improve returns and augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: capital in the near term; however, sustained growth of revenues and earnings will depend on the successful expansion of distribution capacity and consumer acceptance of its new product offerings. An additional offsetting consideration that emerged in 1999 relates to Phoenix Home's 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. business. Phoenix Home could face significant losses in connection with its participation as a pool member and as a retrocessionaire of workers' compensation-related business written through a pool managed by Unicover Managers Inc. Much of the exposure is attributable to uncertainty related to the enforceability of some of the contractual obligations between pool participants and their retrocessionaires, as well as allegations of misrepresentation misrepresentation In law, any false or misleading expression of fact, usually with the intent to deceive or defraud. It most commonly occurs in insurance and real-estate contracts. False advertising may also constitute misrepresentation. by some of the participants in the complex series of retrocessional transactions involved. Although the company's 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 may be hurt by the future performance of this reinsurance business, A.M. Best believes profits from the sale of ancillary businesses this year will give the company flexibility in maintaining its risk-based 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. . A.M. Best will continue to monitor the issue. The quality and liquidity of Phoenix Home's assets are excellent. The company maintains ample liquidity to meet its obligations under a wide variety of economic environments, and its investment portfolio has reported favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. returns while maintaining diversification and high credit quality. A.M. Best also affirmed the A ratings of the following Phoenix Home subsidiaries: Phoenix American Life Insurance Co., Hartford ; PHL Variable Insurance Co., Hartford; American Phoenix Life & Reassurance REASSURANCE. When an insurer is desirous of lessening his liability, he may procure some other insurer to insure him from loss, for the insurance he has made this is called reassurance. Co., Hartford; and Phoenix National Insurance Co., Hartford. The ratings reflect the companies' strategic roles within Phoenix Home and the financial support and operating benefits derived from the parent. 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. |
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