Best Meridian Insurance CPA Rated 'A-' by S&P.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/22/97-- Standard & Poor's today assigned its single-'A'-minus counterparty credit and claims-paying ability ratings to Best Meridian Insurance Co. The rating reflects Best Meridian's 10-year track record in its market of Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , where it has developed a niche providing U.S. dollar-denominated life insurance policies to upper-income individuals. The rating is also based on the company's superior earnings, and its relatively strong capital adequacy and liquidity. Offsetting these strengths are the challenges that Best Meridian faces as a small life insurance company (surplus of $8.6 million) whose reliance primarily on one product (universal life) gives it limited ability to sustain its market presence against potential competitive threats. Best Meridian writes insurance in 17 Latin American countries List of American countries Nations:
MAJOR RATINGS FACTORS -- Best Meridian follows a niche strategy by selectively 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. upper-income business executives and professionals in Latin America. In addition, the company is working to improve its competitive position by introducing new products such as group health, credit life, and variable universal life that target Latin America's growing middle income market. -- Earnings adequacy is superior as measured by Standard & Poor's earnings adequacy ratio. Profitability on a statutory basis has been high, with returns on assets well in excess of 400 basis points (bp) annually since 1992. -- Premium growth has been steady, with premiums rising 9.4% or more year over year during the past five years to $18.2 million last year. -- Investment management by Scudder, Stevens & Clark follows strict guidelines that prohibit investments in real estate and below-investment-grade corporate bonds. While the company has a higher-than-average (36%) concentration of mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. , this is partially offset by a lower-than average S&P MBS See Mb/sec. MBS - mobile broadband services capital charge. -- Capital is relatively strong; however, the company will remain challenged by its small size. Although 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. usage is high, with a 1996 ratio of net to gross premiums of 68%, Best Meridian's reinsurance companies are highly rated. -- Liquidity benefits from highly liquid assets Cash, or property immediately convertible to cash, such as Securities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable. and appropriately priced liabilities that have high surrender charges Surrender Charge A fee levied on a life insurance policyholder upon cancellation of his or her life insurance policy. The fee is used to cover the costs of keeping the insurance policy on the insurance provider's books. to offset lapses. OUTLOOK: STABLE EXPECTATIONS -- Standard & Poor's expects surplus development to remain strong despite the recapture of business currently reinsured. Premium growth is expected to be 10% next year as Best Meridian introduces new insurance products and accelerates the recapture of business currently reinsured. -- Standard & Poor's expects 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). to be superior for Best Meridian in the changing Latin American economic environment. -- CreditWire CONTACT: Tony Simonelli, 212/208-5285 Shelly A Harris, 212/208-1548 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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