Fitch Ratings Affs Sage Life of America's 'AA-' Rtg; Outlook Neg.Business Editors CHICAGO--(BUSINESS WIRE)--May 21, 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 the 'AA-' insurer financial strength rating of Sage Life Assurance of America, Inc. (Sage Life of America). The Rating Outlook has been changed to Negative from Stable. Sage Life of America is a life insurance company that began operations in 1999 as a newly-formed 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. writer supported by Sage Group Limited (Sage Group) and Swiss Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Company (Swiss Re Swiss Re is the world’s largest reinsurer, now that it has acquired GE Insurance Solutions (Ligi 2006). Founded in 1863, Swiss Re now operates in more than 30 countries. General Electric owns 8.9% of the firm. ). The rating is based on the strength and explicit support of Swiss Re, the company's minority shareholder and strategic reinsurance partner, the low risk profile of the company's product offerings and its variable cost structure. Weighed against these positives are the business risks associated with a newly formed company and the competitive nature of the variable annuity marketplace. The Negative Rating Outlook reflects the challenges the company has experienced in gaining sales momentum in a difficult market environment. Sage Life of America had total admitted assets of $104 million and adjusted surplus of $25 million at year-end 2001. Gross annuity deposits totaled $69 million for the year. Sage Life of America is owned by Sage Group Limited (Sage Group), a South African financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. organization, with a market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. of US$180 million as of March 31, 2001. Sage Group and Swiss Re have had a business relationship for more than 30 years. Sage Group and Swiss Re hold an ownership interest in Sage Life of America's holding company, Sage Life Holdings of America, Inc., of 901% and 9.9%, respectively. In addition, Swiss Re holds nonvoting preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . The shareholder agreements and related documents provide backup support by Swiss Re that Fitch views as critical to the rating. Sage Life of America has entered into a multiyear reinsurance agreement with Swiss Re, where they essentially assume the persistency risk. A portion of the quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). reinsurance is retroceded to Sage Group so that the interests of Swiss Re and Sage Group are always equal. Since Sage Group must maintain minimum capital of $25 million in Sage Life of America at all times, Sage Group assumes the overhead expense risk. Sage Life of America has entered into outsourcing agreements for most operations, so a significant portion of costs is variable. Sage Group is actively exploring alternatives to provide for Sage Life of America's future cash needs including issuing new capital to strategic investors of Sage Life Holdings or through the issuance of new Sage Group capital in the international markets. This capital is needed to support business expansion plans. Swiss Re is the world's second-largest reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. with net premium of $15 billion, net earnings of roughly break-even and market capitalization of $32 billion at year-end 2001. Earnings in 2001 were adversely impacted by terrorist attacks on the United States. Fitch maintains an insurer financial strength rating on Swiss Re of 'AAA'. Entity/Issue/Type Action Rating/Outlook Sage Life Assurance of America, Inc. --Insurer financial strength Affirm 'AA-'/Negative. |
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