DUFF & PHELPS: AUSA LIFE INSURANCE COMPANY, INC. CLAIMS PAYING ABILITY RATED 'AA+'
CHICAGO, Nov. 15 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a preliminary claims paying rating of 'AA+' (Double-A-Plus) to AUSA Life Insurance Company, Inc. (AUSA). AUSA is a wholly owned subsidiary of Aegon USA, Inc. Aegon USA is an insurance and financial services holding company wholly owned by Aegon NV, which is headquartered in The Hague, The Netherlands. AUSA's preliminary claims paying ability rating is the same as the outstanding rating for each of five other wholly owned subsidiaries of Aegon USA rated by Duff & Phelps. The preliminary rating is a reflection of a pending transaction with The Mutual Life Insurance Company of New York (MONY). MONY has agreed with Aegon USA to sell the majority of its pension operation to AUSA. The sale is pending board approvals from each company and final regulatory approval. Duff & Phelps' AUSA claims paying ability rating of 'AA+' is contingent upon final execution and review of the associated pending transactions. The preliminary claims paying ability rating anticipates that: (1) AUSA will be provided appropriate capitalization upon closing of the transaction; (2) MONY will participate in the profits and losses of transferred business to AUSA; and (3) Aegon USA will agree to maintain AUSA's tangible net worth, operating leverage and liquidity at stipulated levels. The strength and commitment of its intermediate parent, U.S.-based Aegon USA, Inc., and the support of its ultimate parent, Aegon NV, are important supports to the preliminary rating. Under the agreement with MONY, AUSA will assume (through an assumption reinsurance agreement) approximately $5.7 billion of assets and contract liabilities, representing the majority of MONY's tax deferred annuity, 401(k) and investment management lines of business. In addition, Aegon USA, Inc. obtains all rights to administration systems and distribution systems (including staff) related to MONY's pension operation. Pension business retained by MONY may be, at MONY's option, serviced by Aegon USA. As part of the expected transaction, MONY will purchase $200 million in notes to be issued by Aegon USA, Inc. The notes will mature in the year 2002. The $200 million of proceeds from the note issuance will be utilized as a capital contribution to AUSA. Profits from the run-off of the closing date account balances will belong to MONY until the year 2002 and will be paid to MONY through a reinsurance agreement. In the event of losses on existing business, no reinsurance payment will be made that year and the loss will be carried forward and will reduce payments in future years. Final payment of the notes will be dependent upon the value of the assets and the then remaining business from the transferred block. Aegon USA will acquire the remainder of existing business in the year 2002 at its determined present value of future profits. Upon transfer of assets at closing of the transaction, AUSA will acquire invested assets comprised of $2.7 billion of general account assets (including $1.1 billion of mortgages and $1.6 billion of bonds) which provide a fair representation of MONY's general account asset mix, and $3 billion of separate account assets. Statutory surplus is expected to be $200 million when the transaction is closed. Aegon USA, Inc. will agree to maintain the tangible net worth of AUSA at a minimum of $5 million, to limit operating leverage to 20 times, and will assure that at least 25 percent of adjusted liabilities are held in liquid assets. -0- 11/15/93 /CONTACT: Kevin A. Ceurvorst of Duff & Phelps Credit Rating Co., 312-368-3144/ (AEG)
CO: AUSA Life Insurance Company, Inc. ST: IN: INS SU: RTG
GK -- NY100 -- 4481 11/15/93 13:31 EST
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|Date:||Nov 15, 1993|
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