Fitch Affirms Penn Mutual Life Ratings.Business Editors CHICAGO--(BUSINESS WIRE)--Aug. 2, 2001 Fitch has affirmed the insurer financial strength ratings of Penn Mutual Life Insurance Company (Penn Mutual) and its 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. , Penn Insurance and Annuity Company, at `AA-'. The Rating Outlook on all ratings is Positive. The rating action reflects strong growth in the companies' individual life insurance sales; high quality investment portfolio; strong capital base; good competitive position and favorable operating performance, particularly in the individual life business. These positives are balanced against competitive market conditions and challenges growing its annuity line. The organization maintains a good competitive position in selling individual life insurance in the upper-income market through an expanding and increasingly diverse distribution system. New weighted life premium sales grew at an 18% compound annual growth rate over the last five years and are up 5% for the first quarter of 2001. The companies' consolidated capital base enhances its financial strength. During 2000, capital continued to grow stronger, from both an absolute and risk-adjusted perspective. Adjusted surplus increased to $833 million at Dec. 31, 2000, and operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. and 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. were both strong at 6.2 times (x) and 372% of the company action level, respectively. During this time Penn Mutual's general account liabilities were decreasing as management exited some business lines and increased the emphasis on the sale of variable products. This rebalancing Rebalancing The process of realigning the weightings of one's portfolio of assets. Notes: For example, if your portfolio's proportion of stock has grown too large for your intended assets weightings and risk tolerance, you might rebalance by selling some stock and putting of its product offerings has resulted in a significant strengthening of Penn Mutual's balance sheet. Janney Montgomery Scott LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , the Company's full service regional broker/dealer, provides diversification of revenue and consistently solid earnings. Profitability for 2000 was strong with a reported GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of approximately $42 million and return on equity of 20.3%. One of Penn Mutual's clear strengths is its commitment to its diversified distribution system. This distribution network consists of three parts: a career agency system with over 700 full-time career agents; an Independence Financial Network with nearly 2,300 independent agents under contract; and a broker/dealer network including preferred accounts with 15 financial planner Financial Planner A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. broker/dealer organizations. Penn Mutual appears to have reached a balance among all three distribution channels. For 2000, the organization reported total consolidated premium and deposits of approximately $710 million, an increase of 4% over the previous year. GAAP net income was nearly $140 million for the year on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. and included a one-time gain of $14 million from the venture capital portfolio and another one-time gain of $10 million from a release of tax reserves. This equated to an overall return on equity of 12.7% for 2000. The normalized return on equity for the year was 10.5%. Entity/Issue/Type Action Rating/Outlook Penn Mutual Life Insurance Company --Insurer financial strength Affirm `AA-`/Positive Penn Insurance and Annuity Company --Insurer financial strength Affirm `AA-`/Positive |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion