Combined Insurance Co. of America and Affiliate Outlook Revised to Positive.Business Editors NEW YORK--(BUSINESS WIRE)--March 18, 2004 Standard & Poor's--On March 18, 2004, Standard & Poor's Rating Services revised its outlook on Combined Insurance Co. of America and Combined Life Insurance Co. of NY (collectively referred to as CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) ) to positive from stable. At the same time, Standard & Poor's affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its 'BBB+' long-term counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and financial strength ratings on CICA. The revised outlook reflects CICA's improved 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. and Standard & Poor's anticipation that very strong levels of capitalization will be maintained. The ratings on CICA reflect its niche market A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. position in the supplemental accident, health, and disability insurance markets for individuals; improving profit outlook; and very strong capitalization. Partially offsetting these strengths are the uncertainty of CICA's strategic position within Aon Corp. (A-/Negative/--) and the potential for capitalization to be weakened by dividends to its parent. Outlook Standard & Poor's expects CICA's Company Action level risk-based capital ratio Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. to remain at 300%, which translates to a 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 200%-230%. Standard & Poor's expects that revenue will remain very stable and comparable with 2003 results. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern statutory earnings in 2004 are expected to be stable and in line with 2003 results. Major Rating Factors -- Very strong capitalization. Standard & Poor's estimates CICA's capital adequacy ratio at 200%-230% for year-end 2003, adjusted for a potential $71 million dividend payment in 2004. Although the company has no debt, with the exception of 2002 and 2003, CICA has historically made dividend payments to its parent, Aon. -- Niche distribution and product focus. CICA, through the efforts of its dedicated sales force, has created a profitable niche in the supplemental accident, health, and limited benefit disability market for individuals. -- Operating performance. Although CICA's profitability was significantly below expectations in 2002, earnings rebounded in 2003. Statutory pretax earnings were $150.4 million in 2003 compared with $47.2 million the prior year. Standard & Poor's believes the fundamentals of CICA's business model and long-term direction are strong. -- Ownership. As a wholly owned subsidiary 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. of Aon, CICA potentially benefits from the resources of a higher-rated parent. However, CICA has historically been a provider of capital to Aon, not a user of capital.
Ratings List
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Combined Insurance Co of America
Counterparty credit rating BBB+/Positive/A-2 BBB+/Stable/A-2
Financial strength rating BBB+/Positive BBB+/Stable
Combined Life Insurance Co. of NY
Counterparty credit rating BBB+/Positive/-- BBB+/Stable/--
Financial strength rating BBB+/Positive BBB+/Stable
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar A set of buttons or graphic images typically in a row or column used as a central point that link you to major topic sections on a Web site. If the navigation bar is a single graphic image with multiple selections, it is known as an imagemap. See imagemap. , select Find Ratings, then Credit Ratings Search. |
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