Fitch Affs AEGON Group, U.S. Operations; Rtg Outlook Remains Negative.Business Editors CHICAGO--(BUSINESS WIRE)--Dec. 10, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the 'AA+' insurer financial strength ratings of AEGON Group, U.S. Operations (AEGON Group). The Rating Outlook remains Negative. See detailed ratings list below. While historically AEGON Group has produced strong and consistent earnings, Fitch maintains the Negative Outlook for the ratings because of the persistent earnings drag from adverse capital market and interest rate conditions. Credit defaults, provisions for variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. guarantees and acceleration of deferred acquisition costs were the primary contributors to the 22% decline in net income to $916 million in 2002 (Dutch Accounting Principles). Asset defaults have continued to exceed product pricing in 2003 but are moderating. Although pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. improved 24% to $1.2 billion and net income improved 30% to $869 million, through the first nine months of 2003, net income based ROE remains significantly below the company's target of 11% on an unleveraged basis. Fitch also looks at statutory earnings as an indication of earnings quality and the health of operations, excluding credit defaults. On a statutory basis, net operating gain (before realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses) was $459 million in 2002 and produced a return on surplus (ROS ROS, n.pr See reactive oxygen species. ) of 6.5%, down from 9.1% and 9.0% ROS in each of the previous two years. Through the first nine months of 2003 net operating gain increased 117% to $894 million and is expected to produce a ROS of more than 13% in 2003. While some of this recovery is the result of improvement in equity markets and its impact on statutory reserves for variable annuity guarantees, it also reflects AEGON Group's management of operating fundamentals including expense efficiency, asset liability matching, persistency and crediting rate strategies, as well as new business pricing and design. In resolving the Rating Outlook, Fitch expects 2004 to reflect operating performance in line with 2003, above-industry average ROS, as well as continued moderation in credit defaults. Fitch views AEGON Group's capital position as very strong and commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with the rating. With the exception of 2002, in which first-year direct life insurance premium grew 26% to $884 million with resulting surplus strain, growth has been self-funding. Parent company AEGON NV (NYSE NYSE See: New York Stock Exchange :AEG AEG Aeger (Latin: Sick) AEG Allgemeine Elektrizitäts-Gesellschaft (Common Electricity Company) AEG Aircraft Evaluation Group AEG Association of Engineering Geologists AEG Air Expeditionary Group ) demonstrated its financial strength and flexibility in support of AEGON Group's strong new business levels and strategies with capital and surplus note contributions of $1.7 billion in 2002. AEGON Group's consolidated year-end 2002 NAIC NAIC See National Association of Investors Corporation (NAIC). RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). of 349% was solidly in the range for 'AA+' peers and Fitch expects year-end 2003 RBC to remain above the 329% guideline established for the rating category. Other strengths recognized in the ratings include: significant earnings diversification, weighted toward general account life insurance business; strong risk management discipline, leading and well-established market positions and multi-channel distribution capabilities, very strong life insurance production and solid asset quality. Entity/Issue/Type Action Rating/Outlook Insurer Financial Strength Ratings: Life Investors Insurance Company of America - Affirmed 'AA+'/Negative. Monumental Life Insurance Company - Affirmed 'AA+'/Negative. Peoples Benefit Life Insurance Company - Affirmed 'AA+'/Negative. Stonebridge Life Insurance Company - Affirmed 'AA+'/Negative. Transamerica Financial Life Insurance Company - Affirmed 'AA+'/Negative. Transamerica Life Insurance Company - Affirmed AA+'/Negative. Transamerica Occidental oc·ci·den·tal or Oc·ci·den·tal adj. Of or relating to the countries of the Occident or their peoples or cultures; western. n. A native or inhabitant of an Occidental country; a westerner. Noun 1. Life Insurance Company - Affirmed 'AA+'/Negative. Transamerica Life Insurance & Annuity Company - Affirmed 'AA+'/Negative. Transamerica Life Canada - Affirmed 'AA+'/Negative. Western Reserve Life Assurance Company of Ohio - Affirmed 'AA+'/Negative. Transamerica Life Ins. Co. of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Withdrawn. The rating of Transamerica Life Ins. Co. of New York was withdrawn because it was merged into Transamerica Financial Life Insurance Company. Commercial Paper Ratings: Monumental Life Insurance Company - Affirmed 'F1+'/NA; Transamerica Financial Life Insurance Company - Affirmed 'F1+'/NA. S-T Insurer Financial Strength: Transamerica Occidental Life Insurance Company - Affirmed 'F1+'/NA. Transamerica Life Insurance & Annuity Company - Affirmed 'F1+'/NA. Fixed-Income Ratings: AEGON USA, Inc. -- Long-term Issuer Affirmed 'AA-'/Negative. Commonwealth General -- Senior Debt Affirmed 'AA-'/Negative. Transamerica Corporation Transamerica Corporation is a holding company for various life insurance companies and investment firms doing business primarily in the United States. Transamerica began as a holding company controlled by A. P. -- Senior Debt Affirmed 'AA-'/Negative. Transamerica Capital I, II, and III - Capital Trust Securities Affirmed 'A+'/Negative. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion