Fitch Discusses Insurance Companies' Increasing Use of FHLBank System.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 4, 2003 Insurance companies' increasing use of the Federal Home Loan Bank (FHLBank) system as a source of capital could have possible ratings actions for those companies that do make use of FHLBank advances, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a new Fitch fitch: see polecat. report. Fitch believes the insurers most likely to utilize the FHLBank program are small-to-midsized mutual and stock insurance companies as these companies do not typically have strong access to the capital markets. Fitch evaluates insurance company usage of FHLBank on a case-by-case Adj. 1. case-by-case - separate and distinct from others of the same kind; "mark the individual pages"; "on a case-by-case basis" item-by-item, individual basis. The most important factors in Fitch's analysis are the magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the of borrowings and use of proceeds. Fitch believes that there are aspects of the FHLBank program that are attractive to insurance companies. Specifically, the source of funds is low in cost and does not require the company to file a registration statement with the Securities Exchange Commission and advances receive no risk-based capital charge as they are classified as borrowed money on the liability side of the insurance company's balance sheet. Fitch believes that insurance companies that are members of FHLBank and plan little or no borrowing have improved their financial flexibility and liquidity. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , insurers that borrow Borrow To obtain or receive money on loan with the promise or understanding that it will be repaid. excessively relative to their capital base or use proceeds in a risky manner will likely have negative rating implications. For a copy of Fitch's report titled 'Insurance Company Usage of The Federal Home Loan Bank System' please visit Fitch's web site at 'www.fitchratings.com' or contact the Ratings Desk at 1-800-893-4824. |
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