Cotton States Life Insurance Co. Ratings Taken Off CreditWatch, Affirmed, and Withdrawn.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 10, 2004 On Feb. 10, 2004, Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. affirmed its 'BBB' counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and financial strength ratings on Cotton States Life Insurance Co. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CSLI CSLI Center for the Study of Language and Information CSLI Civil Society and Local Initiatives ), removed them from CreditWatch, and assigned a developing outlook. Subsequently, Standard & Poor's withdrew the ratings at the company's request. Before requesting the withdrawal, CSLI had not communicated with Standard & Poor's for nine months. The ratings on CSLI are based on the company's extremely strong earnings, capitalization, and liquidity. Outlook The outlook reflected Standard & Poor's uncertainty about the ultimate structure of the company following its announced merger with Country 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. . Standard & Poor's expects CSLI's sales to increase 10%-15% per year, mainly because of the enhanced productivity of the independent agents and continued strong demand for the guaranteed and simplified issue life insurance products. CSLI's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ROE is expected to be 10%-12% in 2004, with 6%-8% annual growth. In addition, capital adequacy and liquidity are expected to remain extremely strong, and the investment portfolio is expected to remain conservative. Major Rating Factors -- CSLI's business profile remains good though somewhat limited in terms of product mix and geographical location. CSLI's core business is individual life products sold through 300 exclusive multiline agents and more than 4,000 independent agents targeting the middle-income market in small towns across 10 southeastern states. CSLI and its parent, Cotton States Mutual Insurance Co., share the same exclusive multiline distribution channel as well as most senior managers, the board of directors, and many operational functions. Standard & Poor's believes CSLI's business position is affected by the weaker affiliated property/casualty companies because of the common name and management. CSLI is becoming more independent from its affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. as it expands the independent agents channel and grows its brokerage subsidiaries, which give the multiline agents access to additional life, health, and property/casualty products. -- Standard & Poor's expects profitability to remain strong, but it will be affected slightly in 2004 when lower yields negatively affect the investment income. However, CSLI will continue to have ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). of about 350%. Solid and improving profitability is attributed to expense-reduction efforts, improved distribution channels, fee income from CSLI's two brokerage subsidiaries, and better-than-expected mortality, offset by lower investment income. -- Capitalization is extremely strong, as demonstrated by 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 more than 230% as of year-end 2003. Capital and surplus grew at a compound annual rate of 4.4% in 1998-2003, reaching $35.1 million as of Sept. 30, 2003. -- CSLI's liquidity ratio, based on Standard & Poor's model, is estimated to be more than 400% as of year-end 2003, which is considered extremely strong. A high liquidity ratio has been maintained in the past five years because of the company's stable liabilities and large amount of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has .
Ratings List
Ratings Withdrawn
TO FROM
Cotton States Life Insurance Co.
Counterparty credit rating BBB/Developing/-- BBB/Watch Neg/--
Financial strength rating BBB/Developing BBB/Watch Neg
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 Credit Ratings Actions. |
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