SAVINGS BANK LIFE INSURANCE COMPANY OF MASSACHUSETTS CLAIMS PAYING ABILITY REAFFIRMED 'AA'
CHICAGO, April 5 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the claims paying ability of Savings Bank Life Insurance of Massachusetts (SBLI) at `AA' (Double-A). The rating reflects SBLI's low-cost operations, high quality investment portfolio, conservative and efficient management, and low operating leverage. Weighed against these positives are the company's moderate size and limited ability to generate additional capital except through retained earnings and dividend policy. SBLI is a stock life insurance company with assets of $900 million and adjusted surplus of $106 million as of Dec. 31, 1992. The only stockholders are the 49 state savings banks that merged their insurance departments into SBLI as of Dec. 31, 1991. SBLI ranks third in sales of life insurance by face amount in the state of Massachusetts with total premium and deposits of $106 million for 1992. The average policy size is $125,000 with an average premium of $311. The company does not pay commissions to distribute its products. As a result, the expense ratio of 7 percent for 1992 is very low by industry standards. SBLI has conservative underwriting practices including an exclusion for AIDS. As a result, the mortality and lapse ratios have been consistently low. Profitability, as measured by return on assets, has been consistent over the five year period, 1988-1992, averaging 6.7 percent. In SBLI's first year of operations as a consolidated company, net operating gain was $3 million with ROA being 6.9 percent. Operating leverage (adjusted liabilities to adjusted surplus) has increased slightly from 6.8 times in 1991 to 7.3 times in 1992. However, leverage remains conservative compared to other companies with similar mix of businesses. SBLI has high asset quality. Bonds represent 67 percent and mortgages are 20 percent of total invested assets as of December 31, 1992. Below investment grade securities as a percent of surplus is insignificant. Only $4 million of the entire mortgage portfolio of $177 million are commercial mortgages. Troubled real estate accounts for 1.6 percent of surplus. SBLI has assigned a voluntary mortgage reserve for potential problem mortgages amounting to $5.9 million in 1992. -0- 4/5/93 /CONTACT: Sandra A. Seidl, A.S.A. of Duff & Phelps Credit Rating Co., 312-368-3116/
CO: Savings Bank Life Insurance of Massachusetts ST: Massachusetts IN: INS SU: RTG
LR -- NY037 -- 3035 04/05/93 12:18 EDT
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|Date:||Apr 5, 1993|
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