A.M. Best Affirms Ratings of Sovereign Assurance Company Limited.OLDWICK, NEW JERSEY Oldwick is an unincorporated area within Tewksbury Township in Hunterdon County, New Jersey, United States. The area is served as United States Postal Service ZIP Code 08858. As of the United States 2000 Census, the population for ZIP Code Tabulation Area 08858 was 177. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a+" of Sovereign Assurance Company Limited (Sovereign) (New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. ). The outlook for both ratings is positive. The ratings reflect Sovereign's sustainable market leadership, consistent overall operating profitability and improved risk-adjusted capitalization. The ratings also recognize the company's diversified distribution capabilities and increased focus on its bancassurance Bancassurance A French term referring to the selling of insurance through a bank's established distribution channels. Notes: The result is a bank that can offer banking, insurance, lending, and investment products to a customer. partnership. Sovereign has established itself as the market leader in New Zealand's life insurance industry. The company has maintained its leadership position for the past five years, capturing approximately 32% of the market (as measured by in force premium) as at September 2006. Through its strategic alliance with the ASB Bank, a fellow subsidiary of Commonwealth Bank of Australia, and other distribution channels, Sovereign experienced strong growth in new business premium in recent years. A.M. Best believes its broad distribution network has given Sovereign a competitive advantage among its peers. Overall operating performance has been profitable. In addition to a stable persistency level and continued improvement in expense ratio, strong investment earnings have contributed to the company's bottom line profits over the past years. Sovereign's embedded value Embedded Value A common valuation measure used outside North America particularly in the insurance industry. It is calculated by adding the adjusted net asset value and the present value of future profits of a firm. increased 16.4% to NZD NZD In currencies, this is the abbreviation for the New Zealand Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 864 million (approximately USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 515 million) as at fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. June 2006. A.M. Best expects that consistent premium growth and favorable investment earnings will further enhance the company's embedded value. Despite its relatively high exposure to equities, Sovereign's flexible insurance liability structure enables the company to absorb potential shocks resulting from adverse movement in the equity and property markets. Sovereign's risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. , has improved in fiscal year 2006. An increase in retained earnings has contributed to the company's improved capital position. Furthermore, the capital injection of NZD 60 million (approximately USD 36 million) to Sovereign from the parent company in December 2006 will support future business growth. Partially offsetting these positive factors are strong market competition and uncertainties in relation to life insurance taxation reform. These uncertainties would have a financial impact on life insurance companies in general. Strong business competition for term life and income protection policies from aggressive movers with niche distribution strategies could challenge Sovereign's ability to sustain profitable growth in the mid-term. 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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