A.M. Best Downgrades Ratings of Minnesota Life Insurance Company.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 17, 2004 A.M. Best Co. has downgraded the financial strength rating to A+ (Superior) from A++ (Superior) of Minnesota Life The Minnesota Life Insurance Company was founded in St. Paul, Minnesota in 1880 as a mutual insurance company. It was originally organized as a mutual because a general distrust of stockholder-owned businesses prevailed at that time and there was a shortage of people willing to buy Insurance Company (Minnesota Life) (St. Paul St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery , MN). The financial strength rating of A+ (Superior) has been extended to the company's strategic subsidiary, Northstar Life Insurance Company (Ithaca, NY). Additionally, A.M. Best has downgraded the financial strength rating to A (Excellent) from A+ (Superior) of Securian Life Insurance Company (St. Paul, MN), an affiliate of Minnesota Life. Concurrently, A.M. Best has downgraded the debt rating to "a+" from "aa-" on Minnesota Life's existing surplus notes. All ratings have a stable outlook. These rating actions reflect Minnesota Life's modest operating performance in the past three years as core 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 on both a statutory and GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis have trailed that of both its similarly-rated peers and its own historical performance. Moreover, significant realized and unrealized capital losses in the company's private equity and fixed income portfolios have negatively impacted its surplus position over the same period. Minnesota Life's investment performance improved in 2003, and its capital level, on both an absolute and a risk-adjusted basis, is solid for an A+ rated company. A.M. Best also notes the competitive pressures the company faces in its core business lines--some of which have experienced limited sales growth--and the potential ramifications ramifications npl → Auswirkungen pl of modest scale in some of the core businesses in which the company competes. Minnesota Life is a well-established and respected competitor in its major businesses with a strong operating profile. The ratings acknowledge Minnesota Life's diversified business lines and earnings sources, established distribution channels, strong balance sheet and sound risk-adjusted capitalization. The ratings also recognize the company's conservative operating strategies, effective asset/liability management Asset/Liability Management A technique companies employ in coordinating the management of assets and liabilities so that an adequate return may be earned. Also known as "surplus management. and history of avoiding significant business setbacks. However, scale has become an increasingly important dynamic for competing effectively in some of its businesses. Minnesota Life's overall market presence is not as broad as some A+ rated groups. Therefore, earnings in its various businesses may be challenged in the long run as it competes against larger and better known competitors in the insurance and 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. industry. Minnesota Life maintains a leading position in the mortgage term life segment, an established position in the individual life and annuity market, and a niche presence in the group life, credit union and corporate pension markets. These lines have achieved solid operating performance supported by strong persistency, high retention of field associates, value-added products and services and superior client satisfaction. A.M. Best believes Minnesota Life will continue to generate consistent operating returns by employing defensible de·fen·si·ble adj. Capable of being defended, protected, or justified: defensible arguments. de·fen and sustainable strategies in its business lines and by managing the company in a conservative manner. Sales, retention and marketing expenses of Minnesota Life's mortgage and credit lines are impacted by today's low Today's Low The intra-day low trading price. Notes: In other words, this is the lowest price that a stock traded at during the course of the day. More often than not this is lower than the closing price. See also: Today's High interest rates and high refinancing Refinancing An extension and/or increase in amount of existing debt. activity. Additionally, the company may be challenged to improve sales and profitability in its individual life and annuity business unit, which generates the bulk of its earnings, and to maintain favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. margins given its shift in business mix to lower margin variable products. Nevertheless, A.M. Best acknowledges that Minnesota Life has been operating successfully in this challenging environment. For a list of A.M. Best's debt ratings, please visit http://www3.ambest.com/debtratings/. 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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