S&P Affirms Ratings on AM Leben; Outlook Stable.Business Editors LONDON--(BUSINESS WIRE)--Standard & Poor's CreditWire July 28, 2000--Standard & Poor's today affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its double-'A' counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and insurer financial strength ratings on Aachener und Munchener Lebensversicherung AG (AM Leben). The outlook is stable. The ratings reflect AM Leben's core strategic and operational role within the Italian-based composite group (AA/Stable/--), a very strong business position in the German life insurance sector and strong capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , further underpinned by the excellent financial flexibility of the Generali group. Partially offsetting these strengths are the company's satisfactory operating performance, which is not reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of its market franchise. Major rating factors: -- AM Leben forms a core part of the Aachener und Munchener Group, which in turn is 67% controlled by Generali. The Aachener und Munchener Group is a leading player in Germany, both on the life and nonlife side, representing about one-third of Generali's total revenues with consolidated premium income of DM15.9 billion at year-end 1999. Management of the Aachener und Munchener group has strong autonomy within the Generali group. -- The company benefits from a very strong franchise in the highly fragmented frag·ment n. 1. A small part broken off or detached. 2. An incomplete or isolated portion; a bit: overheard fragments of their conversation; extant fragments of an old manuscript. 3. German life insurance sector. The company now ranks second in the market based on new annual premiums written of DM1.1 billion in 1999. Excellent growth experience has been based on the company's well-established brand name and its strong distribution capabilities as a result of its cooperation with Deutsche Vermogensberatung AG DVAG DVAG Deutscher Verband für Angewandte Geographie (Germany) DVAG Deutsche Vermögensberatung Aktiengesellschaft DVAG Dark energy Vacuum energy Aether Gravity , which exclusively distributes AM Leben's products in the life insurance sector through a network of 21,000 freelance consultants. -- AM Leben exhibits strong capital strength as measured by Standard & Poor's risk-adjusted capital model. As a core part of Generali, which exhibits excellent capitalization, AM Leben also benefits from the financial backing of its ultimate parent. Quality of capital is excellent, with investment leverage standing at a low 103% (including affiliates) at year-end 1999 and no debt on the company's balance sheet. Coverage of the required minimum margin is also strong when including hidden asset values of 3.5 times. Operating performance has not been consistent with a company of AM Leben's size and position. ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). has ranged between 0.2% and 0.3% between 1995 and 1999. This mainly reflects consistently generous bonus payouts and high, although improving expense ratios. OUTLOOK: STABLE AM Leben will continue to benefit from healthy new business growth, mainly driven by unit-linked and annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. products. The company will need to improve operating efficiency in order to compete effectively with peers, in particular in the unit-linked and asset management area. Risk-based capitalization--both at the Aachener und Munchener group level and at AM Leben on a standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. basis--will be maintained at least in the single-'A' category, Standard & Poor's said. - CreditWire |
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