A.M. Best Affirms Ratings of Primary Entities of AEGON; Revises Some Outlooks to Negative.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 12, 2004 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 ratings of A+ (Superior) of the primary life insurance entities of AEGON's U.S. operations (AEGON USA) (Cedar Rapids Cedar Rapids, city (1990 pop. 108,751), seat of Linn co., E central Iowa, on the Cedar River; inc. as a city 1856. The second largest city in Iowa, it is named for the surging rapids in the river. , IA). The rating outlooks have been revised to negative from stable. A.M. Best has also affirmed the financial strength ratings of A (Excellent) and A- (Excellent) of the remaining life insurance entities of AEGON USA, with stable rating outlooks. Concurrently, A.M. Best has upgraded the financial strength rating to A+ (Superior) from A (Excellent) of Stonebridge Life Insurance Company (Rutland, VT). This upgrading reflects Stonebridge Life's core nature and the significant earnings contribution of its direct life insurance operations to AEGON USA. As a result, the company is now assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. the same rating as the highest rated members within the group. The rating affirmations reflect the group's profitable operations, leading market positions in a number of life and annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. market segments and strong balance sheet. The rating outlooks for the A+ (Superior) rated entities were revised to negative based upon a number of factors. Overall 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. , although very adequate to support AEGON USA's business mix, is below A.M. Best's expectation for A+ (Superior) rated organizations. The group's risk-based capitalization has been pressured in recent years by growth in capital intensive interest sensitive business lines, parental dividends and difficult credit conditions. Although operations are profitable, the group's return on equity and earnings growth has been pressured by capital losses, spread compression on its large book of interest sensitive business owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the continued low interest rate environment and low returns on the 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. line of business due primarily to large required statutory reserve increases for product guarantees. Additionally, earnings are gradually becoming more dependent upon spread and fee businesses as new sales of life insurance have been modest in recent years. AEGON USA's business profile is very strong with a top five position in the U.S. life and annuity marketplace. The group's market position was achieved through acquisitions and organic growth, supported by a large and diversified diversified (di·verˑ·s distribution system. Its multi-channel distribution platform and leading direct marketing operation, along with strong brand recognition--including the Transamerica brand--generate over $30 billion in annual net premiums and deposits across a broad product shelf. Accordingly, earnings are enhanced by meaningful economies of scale and are diversified by product type. The group's investment management capabilities are core to the excellent asset-liability management discipline, maintenance of a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. liquidity posture posture /pos·ture/ (pos´choor) the attitude of the body.pos´tural pos·ture n. 1. A position of the body or of body parts. 2. and global integrated risk management process. Moreover, operating performance improved in 2003, reflecting an overall improvement in economic conditions and credit markets. However, A.M. Best believes that the group remains challenged to achieve and maintain target spreads on its spread-based businesses as low interest rates continue to pressure investment returns. Additionally, low organic growth in life products will increase AEGON USA's dependence on interest sensitive and fee-based business over time. For a complete listing of AEGON USA's financial strength ratings, visit www.ambest.com/press/031203aegon.pdf. 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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