A.M. Best Takes Various Rating Actions on Legal & General Assurance Society Ltd. and Legal & General Plc.OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to A+ (Superior) from A++ (Superior) and 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. an issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "aa" to Legal & General Assurance Society Ltd. (United Kingdom). At the same time, the ICR of the non-operating holding company, Legal & General Group Plc (L&G), has been downgraded to "a+" from "aa-". Accordingly, the financial strength ratings of L&G's U.S. subsidiaries and the ratings of L&G's debt issues have been downgraded. The outlook for all ratings has been revised to stable from negative. These rating actions reflect the potential for deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the quality of consolidated economic capital and the pressures on financial performance due to lower new business margins for some products, albeit average profitability remains at a relatively high 40%. L&G is likely to take full advantage of the consolidation trends perceived per·ceive tr.v. per·ceived, per·ceiv·ing, per·ceives 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. in the UK life market while retaining its superior business profile. Deteriorating de·te·ri·o·rate v. de·te·ri·o·rat·ed, de·te·ri·o·rat·ing, de·te·ri·o·rates v.tr. To diminish or impair in quality, character, or value: quality of economic capital--A.M. Best believes that L&G's total economic capital is likely to remain unchanged during the next two years, supporting business growth. However, the overall quality of the capital will weaken with increased reliance on value of in force (VIF VIF - VHDL Interface Format. Intermediate language used by the Vantage VHDL compiler. "A VHDL Compiler Based on Attribute Grammar Methodology", R. Farrow et al, SIGPLAN NOtices 24(7):120-130 (Jul 1989). ). Rapid growth taking advantage of market consolidation trends--L&G's superior business profile will most likely enable it to take advantage of market consolidation trends while continuing to change its business mix. L&G reported strong new premium growth of 12% for the first nine months of 2004. The balance of new business continues its shift further toward annuities, protection and unit-linked lines with approximately 70% of business originating from these products. Reducing new business margins and exposure to adverse experience--A.M. Best anticipates new business margins to continue to decrease due to the move toward more competitive and commoditised protection products. A.M. Best believes that these margins could be further reduced in the future if L&G needs to further revise its reserving assumptions with negative effects on profitability. This is particularly relevant following the reserve strengthening actions experienced over the last three years. New business volume growth is likely to deliver increased consolidated operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , the majority of which, in A.M. Best's opinion, is likely to be distributed as dividends. The financial strength rating has been downgraded to A+ (Superior) from A++ (Superior) and an ICR of "aa" has been assigned to the following U.S. subsidiaries of L&G: --William Penn Life Insurance Company 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 --Banner Life Insurance Company The existing senior debt issues have been downgraded to "a+" from "aa-". The existing subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". issues have been downgraded to "a" from "a+". For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/debt. 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 http://www.ambest.com. |
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