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DUFF & PHELPS: THE LAFAYETTE LIFE INSURANCE COMPANY CLAIMS PAYING ABILITY RATING REAFFIRMED AT 'AA'

 CHICAGO, Oct. 27 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the `AA' (Double-A) claims paying ability rating of The Lafayette Life Insurance Company (Lafayette Life). The rating is based on the company's strong profitability, conservative investment portfolio, and reasonable utilization of operating leverage.
 Lafayette Life is a mutual insurance company with headquarters in Lafayette, Ind. The company reported statutory admitted assets of $588.5 million and adjusted surplus of $53.5 million as of June 30, 1993. The company primarily offers individual life insurance through a network of independent agents. Other products include individual annuities, group life, group long and short-term disability, and stop loss coverage for ERISA health plans. Net premium and deposit volume for 1992 was divided 64 percent individual life and health, 19 percent group life and health, 12 percent individual annuities, and 5 percent group annuities.
 Profitability has been very good for the last several years as evidenced by Lafayette Life's average annual return on assets for the period 1988-92 of 3.8 percent. In 1992, the company reported net operating income of $4.7 million on premium volume of $105.7 million. In 1993, profitability is slightly below expectations due to adverse claims experience in the group segment. At June 30, 1993, the company reported net operating income of $1.2 million on premium volume of $57.9 million. Operating leverage, as measured by the ratio of adjusted liabilities to adjusted surplus has trended downward for the last several years, and was 10.0 to 1 at mid-year 1993.
 As of June 30, 1993, Lafayette Life's investment portfolio was concentrated in bonds (76 percent of invested assets), mortgage loans (13 percent), and policy loans (10 percent). Fixed income investments are mainly in mortgage backed securities and utility issues. The portfolio is of very high quality as 99 percent of all bonds are rated investment grade and the average bond rating is `AA-' (Double-A-Minus). The mortgage portfolio is well-diversified and of very high credit quality. Lafayette Life's experience regarding non-performing mortgages and real estate is well below industry averages.
 -0- 10/27/93
 /CONTACT: James B. Auden, CFA of Duff & Phelps Credit Rating Co., 312-368-3146/


CO: Lafayette Life Insurance Company ST: Indiana IN: INS SU: RTG

TS -- NY044 -- 7209 10/27/93 10:59 EDT
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Publication:PR Newswire
Date:Oct 27, 1993
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