A.M. Best Affirms Ratings of CIGNA Life Insurance Company of Europe S.A.-N.V.OLDWICK, N.J. -- 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 financial strength rating of B++ (Good) and issuer credit rating of "bbb+" of CIGNA CIGNA CG (Connecticut General Life Insurance Company) INA (Insurance Company of North America) Life Insurance Company of Europe S Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .A.-N.V. (CLICE) (Belgium). The
outlook on both ratings remains stable.
The ratings reflect the company's strong business position in a challenging market, reduced 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. performance and rebounding risk-adjusted capitalisation. A.M. Best expects the company's gross written premium to continue growing at an average combined rate of approximately 5% during 2007 due to the impact of recent distribution agreements. A.M. Best believes that the longer term prospects of the company depend heavily on its ability to introduce new and differentiated products in a highly competitive market. A.M. Best expects CLICE's combined ratio to return to about 99% in 2007 following the exceptional result of 2006 when the company's combined ratio was 94%. Although the company suffered one-off losses arising from the fraudulent activities of one distributor in 2006, most of the hit was taken and provisioned for in 2006. A.M Best believes that the rise in the combined ratio in 2007 will be a result of business expansion expenses and minimal growth in gross written premiums. A.M. Best expects CLICE's combined ratio to stabilize stabilize See peg. at about 97% as the business expansion begins to bear fruit. A.M. Best believes that the modest business growth in 2007, coupled with full earnings retention 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. cessions to an affiliate, will see risk-adjusted capitalisation return to pre 2006 levels. CLICE's risk-adjusted capitalisation fell sharply in 2006 following strong gross written premium growth of approximately 25%, coupled with a significant reduction in retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. following the one-off losses. These losses highlight the need for a significant improvement in CLICE's risk management systems and processes. Credit risk arising from increased reinsurance recoverables will be kept low due to the funds being withheld by CLICE. A.M Best believes that risk-adjusted capitalisation will remain stable longer term, supported by modest growth and a policy of earnings retention to support the capital position. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion