Ameritas Life Ins Grp Members Rtgs Afmd;Re:Merger.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/17/98-- Standard & Poor's today affirmed its double-'A' financial strength and counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit ratings on Ameritas Life Insurance Corp., Ameritas Variable Life Insurance Co., and First Ameritas Life Insurance Corp. of NY (collectively 'Ameritas'). This rating action follows the announcement by Ameritas of the proposed mergers of the Ameritas Mutual Insurance Holding Co. with Acacia acacia (əkā`shə), any plant of the large leguminous genus Acacia, often thorny shrubs and trees of the family Leguminosae (pulse family). Mutual Holding Co. and Ameritas Holding Company with Acacia Financial Group LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability . Upon successful completion of the proposed merger, Standard & Poor's will view the Acacia life insurance companies The ‘’’Acacia Life Insurance Company’’’ was established in 1867 as a mutual company owned by its policyowners. Its headquarters are in Washington, D.C. as strategically important to the Ameritas Group. Standard & Poor's also expects Ameritas group's double-'A' financial strength rating will be applied to the Acacia life insurance companies. However, it should be noted that the final application of Ameritas' double-'A' group rating to Acacia is predicated on further analytical work being completed on the Acacia life insurance companies. Standard & Poor's views this proposed merger as positive. In addition to providing Ameritas with expanded distribution and market potential, which should inevitably lead to increased revenues and profit margins, the combination will allow the newly formed entity to compete more effectively in the capital markets. Offsetting this to some degree will be the initial impact of the merger on Ameritas' future earnings, which are expected to decline for at least the first 12 months-18 months post merger as Ameritas absorbs the relatively poorer earnings performance of Acacia. However, Standard & Poor's expects that consolidated earnings through the integration period will remain consistent with the current rating and should further strengthen after 18 months. Major rating factors include: -- Ameritas possesses a strong business profile with its well-diversified business mix. Both individual fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. and the group dental lines of business have seen significant expansion through the formation of joint ventures and strategic alliances. -- Ameritas benefits from a superior capital position with an extremely strong 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 more than 500% at year-end 1997. This provides Ameritas with the opportunity to continue its plans for growth. -- Earnings have remained strong due to good underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and good expense management, with a consolidated five-year average 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 over 160 basis points. Consolidated pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern net gain from operations was about $60 million in 1997, about a 10% increase over 1996, which was influenced greatly by good mortality and morbidity results. -- Ameritas' investment portfolio is of high credit quality and soundly managed. About three quarters of invested assets are invested primarily in 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. . In addition, mortgage loans account for 13%, with problem loans representing less than 2.5% of total mortgages. -- The company possesses extremely strong liquidity based on the Standard & Poor's liquidity ratio. OUTLOOK: STABLE Standard & Poor's has assessed the impact that the merger would have on Ameritas' financial profile and determined that the preliminary structure of the deal is consistent with the current rating. -- CreditWire |
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