A.M. Best Lowers Guardian Life Rating To "A+" - Superior.OLDWICK, N.J.--(BUSINESS WIRE)--July 11, 1997--Effective immediately, Guardian Life Insurance Co. and Guardian Insurance & 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. Co. Inc., both of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , N.Y., had their 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. of "A++" (Superior) lowered to "A+" (Superior). The action reflects the company's difficulty re-establishing sales momentum and sustaining productivity in its life segment, especially in light of reduced demand for life insurance products. It also acknowledges the competitive pressure faced by the company as it continues to shift its group medical line toward becoming a regional provider of managed care. The company has developed sound strategic operational plans for each of its primary business units. A.M. Best will continue to monitor these initiatives and believes the company's superior 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. gives it a high degree of flexibility in reinvigorating its individual life and non-medical group insurance operations while continuing to build a more prominent presence in its equity and pension businesses. The Superior rating reflects superior capitalization, the high quality of the company's investment portfolio--which leads to and supports exceptional liquidity--and its conservative operating strategy. It also acknowledges the company's diversified diversified (di·verˑ·s product portfolio and earnings sources, which are supported by strong positions the company has attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. in its individual life, group insurance and equity-based product segments. Guardian also holds a prominent role in the industry as a reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. of life insurance written by other companies. Guardian has experienced considerable reductions in the number of new policies in each of the past four years. Nevertheless, its focus on the upper-income market enabled it to annually increase first-year premium production modestly in 1994 and 1995. In 1996, however, a 14% reduction in the amount of policies issued resulted in a 14% decline in first-year premium income. Contributing to the decline was a reduction in the dividend scale, which substantially reduced sales in Guardian's brokerage operations. Although the dividend scale has since been increased and sales during the first quarter of 1997 have rebounded somewhat, sales results remain below those achieved in 1995. While A.M. Best believes new and revised products, together with considerable technological investments aimed toward enhancing service to producers and policyholders, will enable sales to improve, the company still faces competitive pressure in its targeted upscale market. A.M. Best also believes the company will be find it difficult to sustain profitability in its group insurance segment, as ongoing premium revenue reductions in its medical indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. line will need to be offset by expansion of its managed care, dental, life and disability operations. Guardian's conservatively managed $11.2 billion investment portfolio is of excellent quality. Government and investment-grade corporate and public utility bonds represented nearly two-thirds of invested assets at the end of 1996. Although the company's holdings of equity securities, at 19% of invested assets, is greater than those of its peers, the portfolio is managed to ensure a highly diversified mix of utility, bank and industrial common and preferred stocks Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . Its common stock portfolio has provided the company with excellent total returns. Guardian's excellent liquidity is supported by consistently strong cash flow and $7 billion of investment-grade bonds Investment-grade bonds A bond that is assigned a rating in the top four categories by commercial credit rating companies. S&P classifies investment-grade bonds as BBB or higher, and Moody's classifies investment grade bonds as BAA or higher. Related: High-yield bond. , cash and short-term investments (67% of invested assets, excluding policy loans). A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. CONTACT: Jeffrey Dunsavage 908/439-2200, ext. 5618 dunsavj@ambest.com |
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