A.M. Best Upgrades General American Life and Subsidiaries, Removes Negative Outlook from MetLife on Close of Acquisition.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 7, 2000 A.M. Best Co. has upgraded the financial strength rating of General American Gen·er·al American n. The speech of native speakers of American English that many consider to be typical of the United States, noted for its exclusion of phonological forms readily recognized as regional or limited to particular social groups and for Life Insurance Co. (GAL) and its wholly owned subsidiaries--Cova Financial Life Insurance Co., Cova 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. Life Insurance Co., First Cova Life Insurance Co., General Life Insurance Co., General Life Insurance Co. of America, Paragon Life Insurance Co. and Security Equity Life Insurance Co.--to A (Excellent) from B (Fair). The rating also was removed from under review. RGA RGA Reinsurance Group of America RGA Return Goods Authorization RGA Republican Governors Association RGA Residual Gas Analyzer RGA Royal Garrison Artillery RGA Restricted Growth Association (UK) RGA Rate Gyro Assembly Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Co., an affiliate of GAL, also was upgraded to A from B++ (Very Good) and had its rating removed from under review. In addition, the A+ (Superior) rating of Metropolitan Life Insurance Co. and Metropolitan Tower Life Insurance Co. was affirmed and the negative outlook was removed from the rating. The actions follow the closing of MetLife's acquisition of GenAmerica Corp., the parent of GAL. The purchase price was approximately $1.2 billion in cash. The upgrade of GAL and its wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. reflects the resolution of its recent liquidity shortfall through a stabilization program implemented by MetLife. These rating actions also reflect the strategic role the GenAmerica companies are expected to play within the MetLife organization and the explicit financial support MetLife will continue to provide. This support is evidenced by the establishment of a net worth maintenance agreement whereby MetLife has pledged to maintain risk-adjusted capital and liquidity at a level appropriate for its business activities and existing financial strength ratings. A.M. Best views the acquisition favorably, as it provides MetLife with a strong retail distribution platform in the independent agent market and a controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in some well-regarded complementary businesses, including RGA--a significant player in the life reinsurance market. A.M. Best believes the addition of GAL's network of 3,000 independent general agents fits well with the organization's strategy to broaden its distribution of individual life and annuities. In addition, the regional broker-dealer and national wirehouse distribution capacity provided by GAL's Cova Corp. subsidiaries significantly enhances MetLife's capability to distribute asset accumulation products. A.M. Best expects earnings to improve as a result of the acquisition and believes the addition of GAL and its affiliates further strengthens the organization's diverse operating platform. On Aug. 11, 1999, GAL asked the Missouri Department of Insurance to place it under administrative supervision due to concerns about its ability to protect the interests of its individual policyholders as a result of increasing surrender activity associated with its institutional funding agreement Funding Agreement Illiquid insurance contracts that provide guaranteed principal repayment and interest payments for a predetermined period of time. Notes: Funding agreements are marketed to mutual fund companies and municipal reinvestments. business. As part of its acquisition of GenAmerica, MetLife implemented a stabilization program to provide the liquidity needed to satisfy GAL's institutional funding agreement contracts. Under the terms of the acquisition, all funding agreement liabilities and an equivalent amount of assets were transferred to MetLife, effective Sept. 29, 1999. To date, over $5.1 billion of the nearly $5.8 billion in transferred liabilities have been paid in full, in response to contract holder requests. The remaining asset portfolios at GAL and its subsidiaries have been rebalanced--providing liquidity, quality, duration and yield characteristics appropriate for the remaining liabilities. A. M. Best notes the significant decline in new business activity across the GenAmerica companies, resulting from the placement of GAL under administrative supervision--which ended following the closing of the acquisition. However, A.M. Best believes overall franchise value and productivity of GenAmerica's affiliated distribution channels have not been significantly impaired and expects sales to recover to the group's historical levels, aided by its association with MetLife. A.M. Best will continue to closely monitor the restoration of sales activity, as well as other key measures of operating performance within GAL and its affiliates. Proceeds from MetLife's purchase of GAL have been placed in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. . These funds, including interest, ultimately will be distributed to GAL policyholders after certain charges, if any, permitted under the definitive agreement are deducted. MetLife financed the acquisition, as well as the stabilization program, which resolved GAL's liquidity problems, mainly through the issuance of commercial paper. Despite these short-term borrowings, MetLife's leverage and risk-adjusted capital levels fall well within the expectations of its current rating. In addition, A.M. Best expects MetLife to prudently pay down its outstanding commercial paper in the near term. The removal of the negative outlook from MetLife's A+ rating reflects the substantial improvement in the operating fundamentals of the company's core businesses, as well as the strategic benefits the GAL acquisition is expected to provide. The company has implemented a series of initiatives in its individual business segment (individual life and annuities) that have enhanced productivity and improved agent retention. It also has expanded its presence in the institutional pension arena through organic growth and strategic acquisitions. As a result of these efforts, the company has reported steadily improving sales and 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 and consistent growth in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. . A.M. Best also views positively the increased flexibility the organization is expected to gain in connection with its planned demutualization Demutualization The process of changing corporate structure from a mutual fund company to some other form, such as a limited liability or corporation. Notes: This means mutual/life insurance companies convert from policyholder companies to stock companies. , which also is reflected in this rating action. A.M. Best believes the organization has established a strong operating platform that will enable it to compete effectively against other diverse financial services providers. The rating agency said it expects to see continued improvement in the company's operating performance. The A ratings of the following MetLife affiliates are unaffected by the rating action: Metropolitan Insurance & Annuity Co., Newark, Del.; New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. Life Insurance Co., Boston, Mass.; Texas Life Insurance Co., Waco, Texas For the Branch Davidian siege in Waco, Texas, see . For other uses of "Waco", see Waco (disambiguation). Waco (pronounced: /ˈweɪkoʊ/) is the county seat of McLennan County, Texas. ; Security First Life Insurance Co., Wilmington, Del. The financial performance rating of FPR FPR Ford Performance Racing FPR Front Patriotique Rwandais (Rwanda Patriotic Front) FPR Floating-Point Register (CPU architecture) FPR Fuel Pressure Regulator (automotive) 7 (Strong) for MetLife Security Insurance Company of Louisiana CODE, OF LOUISIANA. In 1822, Peter Derbigny, Edward Livingston, and Moreau Lislet, were selected by the legislature to revise and amend the civil code, and to add to it such laws still in force as were not included therein. , Baton Rouge Baton Rouge (băt`ən r  zh) [Fr.,=red stick], city (1990 pop. 219,531), state capital and seat of East Baton Rouge parish, SE La. , also is unchanged. 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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