American Merchants Life Insurance Rated BBBpi by S&P.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 11/5/98--Standard & Poor's today assigned its triple-'Bpi' (Good) insurer financial strength rating to American Merchants Life Insurance Co. American Merchants Life is licensed in 38 states. The company commenced operations in 1980, and became a member of the Life Re group in 1997. Its major line of business is ordinary life insurance. The following factors were incorporated in the rating of triple-'Bpi'. -- 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. is extremely strong, as indicated by Standard & Poor'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. of 218.6%. -- The company has a moderate exposure to medium and low-grade bonds. -- The company had a risk adjusted return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). of -1.8% for the period 1992-1997, caused primarily by acquisition activity in 1994. 'Pi' ratings, denoted with a pi subscript (1) In word processing and scientific notation, a digit or symbol that appears below the line; for example, H2O, the symbol for water. Contrast with superscript. (2) In programming, a method for referencing data in a table. , are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. The ratings do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a pi subscript. Pi ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a pi subscript are not subject to potential CreditWatch listings. Ratings with a pi subscript generally are not modified with 'plus' or 'minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. by sovereign risk Sovereign Risk The risk that a foreign central bank will alter its foreign-exchange regulations thereby significantly reducing or completely nulling the value of foreign-exchange contracts. or the credit quality of a parent company or affiliated group, Standard & Poor's said.---CreditWire |
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