Fitch Affs Rtgs of Great American Financial Resources, Inc. & Subs.Business EditorsCHICAGO--(BUSINESS WIRE)--Sept. 1, 2000 Fitch, the international rating agency formed through the merger of Duff & Phelps Credit Rating Co. and Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals , affirmed the `AA-' insurer financial strength ratings of Great American Life Insurance Co. (GALIC GALIC Great American Life Insurance Company ), Loyal American Life Insurance Co. (Loyal) and Annuity Investors Life Insurance Co. (AILIC), which are the insurance operating subsidiaries of Great American Financial Resources, Inc. (GAFR). Fitch also affirmed GAFR's senior debt and remarketed preferred securities at `A-' and trust originated preferred securities (TOPrS) at `BBB'. The Rating Outlook is Negative due to high leverage at GAFR and its parent, American Financial Group. GAFR's strengths include its established niche in the qualified annuity market, a history of strong profitability and a solid capital position. Balanced against these strengths is GAFR's high leverage. [pilcrow (paragraph sign)] The quality of GAFR's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). profitability remains high due to healthy spreads and strong persistency of its annuity business, especially the 403(b) business. Qualified annuities continue to represent a greater than 80% share of total annuity reserves. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. consolidated GAAP operating return on average assets for the first half of 2000, excluding the impact of a $21 million litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. provision, was 1.39% and return on average equity was 17.7%. GAFR offers fixed, equity-indexed and variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. to both qualified and non-qualified markets, life and accident and health insurance through its insurance operating subsidiaries GALIC, Loyal and AILIC. Consolidated premium and deposits reached $714 million in 1999, bolstered by variable annuities and life and accident and health premium. Premium improved period-to-period, adjusting for the 1998 sale of GAFR's pre-need division, which accounted for $100 million in premium during 1998. GAFR reported total assets of $7.7 billion and stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. of $509 million as of June 30, 2000. Debt-to-capital, adjusted for 50% equity credit of GAFR's TOPrS, the effects of FAS 115 and $30 million of cash held at the holding company level for strategic reasons, reached nearly 33% at June 30, 2000. Leverage exceeded Fitch's 30% expectations, spurred by the United Teachers Associates Insurance Co. (UTA uta see leishmaniasis. ) acquisition late in 1999. GAFR acquired UTA near year-end 1999. UTA provides supplemental health and retirement annuities to retired and active teachers, complementing GAFR's existing qualified business. However, the acquisition was modest in proportion to GAFR's consolidated operations, representing less than 10% of pro-forma 1999 total premium and deposits. Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in 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 and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Corporates, Structured Finance, Insurance, Sovereigns and Public Finance Markets worldwide. |
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