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D&F RATES PROTECTIVE LIFE INSURANCE COMPANY, EMPIRE GENERAL LIFE ASSURANCE CORPORATION AND AMERICAN FOUNDATION LIFE INSURANCE COMPANY

 CHICAGO, Aug. 31 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the claims paying ability of Protective Life Insurance Company (Protective) `AA' (Double-A). The rating reflects Protective's sound and improved profitability; breadth of product offerings; use of conservative, although rising, operating leverage; and high quality, strong performing investment portfolio, despite an above average concentration in mortgage loans. The rating also takes into account the business risks associated with the company's strategy to enhance its return on surplus through acquisitions and increasing annuities and GICs as a proportion of its total product mix. The reaffirmation of the `AA' (Double-A) claims paying ability ratings of Empire General Life Assurance Corporation (Empire) and the new 'AA' (Double-A) claims paying ability rating of American Foundation Life Insurance Company (American Foundation) reflect the strength of Protective and its willingness to guarantee all liabilities of the subsidiaries.
 Protective, a Birmingham, Ala.-based stock life insurance company, had admitted assets of $3.7 billion and adjusted surplus of $233 million at the end of 1992. Protective operates in numerous segments of the life insurance industry and focuses its efforts primarily through six business units: agency marketing, group marketing, financial institutions marketing, investment products, guaranteed investment contracts (GICs), and block acquisition business.
 Protective's strategic efforts over the past several years are now paying off. Life insurance sales have doubled over five years due to expansion in the agency distribution system, and a significant increase in annuity and GIC production and in-force has also resulted in increased profitability.
 Return on average assets decreased to 1.42 percent in 1992 from 1.61 percent the previous year, primarily because of the addition of National Deposit Life Insurance Company's lower margin GICs. Return on adjusted surplus correspondingly fell to 13.0 percent in 1992, from 14.5 percent in 1991, but also reflected the expiration of several federal tax advantages and the resulting increase in taxes paid. Protective's capitalization increased 17 percent to $233 million in 1992, but as a percentage of total assets capitalization fell to 6.3 percent from 8.0 percent because of the 49 percent increase in assets. The ratio of adjusted liabilities to adjusted surplus (which excludes separate accounts) also increased to 13.65 times from 10.87 times at yearend 1991.
 Protective acquired American Foundation, which is licensed in New York, ten years ago as part of its acquisition program. Protective moved all of American Foundation's marketing into Protective and as such, American Foundations $5 million in premium income in 1992 was virtually all renewal premium. Protective now plans to commence sales of registered annuity products in New York and began selling payroll deduction dental business in late 1992. American Foundation had admitted assets of $86 million and adjusted surplus of $18 million at yearend 1992. Empire, which is domiciled in Tennessee, is a shell corporation recently purchased by Protective to write ordinary life products using a spread commission concept (lower first year commissions and higher renewal commissions). Empire began selling excess interest whole life in 1993 and had admitted assets of $5 million and adjusted surplus of $5 million at yearend 1992.
 -0- 8/31/93
 /CONTACT: Martha M. Butler, CFA of Duff & Phelps Credit Rating Co., 312-368-3191/


CO: Protective Life Insurance Company; Empire General Life Assurance; American Foundation Life Insurance Company ST: Illinois, Alabama, New York, Tennessee IN: INS SU: RTG

WB -- NY030 -- 7484 08/31/93 12:03 EDT
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Publication:PR Newswire
Date:Aug 31, 1993
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