Fitch Affs AEGON USA, Inc.'s Rtgs with Neg Outlook; Rmvd from Watch Neg.Business Editors CHICAGO--(BUSINESS WIRE)--Oct. 30, 2002 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 and removed from Rating Watch Negative the ratings of AEGON USA, Inc. (AEGON USA). The Ratings Outlook is Negative. See detail list below. The affirmation and removal from rating watch follows a September 30, 2002, capital injection from 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 ) into AEGON USA, Inc. and ultimately certain individual life insurance subsidiaries. In Fitch's view this was a solid indication of AEG's commitment to U.S. strategies and financial strength and demonstrated the financial flexibility of AEG. While asset defaults and strong new business growth resulted in a 1.7% decline in AEGON USA's statutory capital for the first six-months of 2002, Fitch believes that AEGON USA's statutory capital position of approximately $7.1 billion at 9/30/02 is supportive of its strong production levels and results in a consolidated 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). that meets adjusted guidelines established for the rating category as part of Fitch Life Insurance Review in September 2002. In addition to capital, the affirmation also reflects other significant strengths including well-established market positions; balance in product offerings that result in a majority of earnings from more stable general account life insurance and individual fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. ; strong and disciplined pricing and risk management capabilities; low cost, efficient operations and high-quality assets. The negative outlook for the ratings reflects earnings over the last 15 months which have been hampered by credit default levels that were outside product pricing, as well deterioration in U.S. stock market performance that prompted deferred acquisition cost (DAC See D/A converter and discretionary access control. DAC - Digital to Analog Converter ) unlocking and strengthening of reserves for guarantees in variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. in 2002. Historically, AEGON USA has produced strong and consistent earnings and forecasted 'run-rate earnings' for 2003 and the next several years also imply return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). and return on equity that are commensurate with the 'AA+' IFS ratings. However, since it is possible that adverse capital markets conditions could cause credit or equity-related losses to exceed pricing assumptions or result in further DAC unlocking in the future, Fitch will monitor AEGON USA's investment-related performance, and any material deviation from expectations would likely result in a ratings downgrade. AEGON USA continues its solid management of other business fundamentals business fundamentals The general background within which an economy operates including earnings, sales, wage rates, taxes, and inflation. Improving business fundamentals are generally viewed as bullish for stocks, although stock prices at any given point including expenses, mortality/morbidity, persistency and asset/liability matching. Top-line growth continues to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, the industry in 2002, proving the effectiveness of AEGON USA's strategy of developing multi-branded products and multi-channel distribution. Entity/Issue/Type Action Rating/Outlook Insurer Financial Strength Ratings Affirmed and Removed from Rating Watch Negative: AUSA Life Insurance Company, Inc. Affirmed 'AA+'/Negative. Life Investors Ins. Co. of America Affirmed 'AA+'/Negative. Monumental Life Insurance Company Affirmed 'AA+'/Negative. Transamerica Life Insurance Company Affirmed 'AA+'/negative. Peoples Benefit Life Insurance Company Affirmed 'AA+'/Negative. Transamerica Occidental Life Ins. Co. Affirmed 'AA+'/Negative. Transamerica Life Ins. & Annuity Co. Affirmed 'AA+'/Negative. Transamerica Life Ins. Co. of New York Affirmed 'AA+'/Negative. Transamerica Life Canada Affirmed 'AA+'/Negative. Western Reserve Life Assurance Co. of Ohio Affirmed 'AA+'/Negative. Stonebridge Life Insurance Co. Affirmed 'AA+'/Negative. Commercial Paper Ratings: AUSA Life Insurance Company, Inc. Affirmed 'F1+'/NA. Monumental Life Insurance Company Affirmed 'F1+'/NA. S-T Insurer Financial Strength: Transamerica Occidental Life Ins. Co. Affirmed 'F1+'/NA. Transamerica Life Ins. & Annuity Co. Affirmed 'F1+'/NA. Fixed-Income Ratings: AEGON USA, Inc.Senior Debt Affirmed 'AA-'/Negative. Commonwealth General Senior Debt Affirmed 'AA-'/Negative. Transamerica Corporation Senior Debt Affirmed 'AA-'/NA. Transamerica Capital I, II, and III - Capital Trust Securities Affirmed 'A+'/NA. |
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