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/FIRST ADD -- A.M. BEST RELEASES ANNUAL REVIEW OF INTERNATIONAL INSURERS/

 -- Confederation Life Insurance Company, Toronto, was assigned a 1993 Best's Rating of "A" (Excellent). The company's financial strength was downgraded from "Superior" to "Excellent" and its rating level was downgraded from "A+" to "A." This rating reflects the company's diversified income streams, the strong market positions of its business units, favorable initiatives implemented by the company's new senior management and improving capitalization. Offsetting these strengths is the expectation that the company's earnings performance will continue to be pressured from continuing delinquencies within the commercial mortgage portfolio and from the affiliated trust company.
 The company maintains leading market positions in Canada, the United States and the United Kingdom. In Canada, the company maintains a dominant position in the large case Canadian group insurance market and in group pensions; in the United Kingdom, it is the second largest pooled pension fund manager and delivers unit-linked life products through a strong career agency force; and in the United States, operations are focused on marketing individual and group life and annuity products for estate planning needs and corporate pension plans.
 Overall mortgage performance within the insurance company portfolio has been generally favorable to industry experience. However, given the large size of the mortgage portfolio, delinquencies are relatively high when related to total capital. In addition, delinquencies will likely not decline in the next two years, given the company's exposure to loans in Ontario and California. Although asset writedowns will continue to impact overall earnings performance for the next several years, A.M. Best believes that the company has taken measures to improve earnings from the modest levels reported in the past two years.
 -- Crown Life Insurance Company, Toronto, was assigned a 1993 Best's Rating of "A-" (Excellent). The company's excellent financial strength was affirmed and its rating level of "A-" was unchanged. This rating reflects the company's good capitalization, the expense efficiencies from the company's relocation to Regina, Saskatchewan, the good quality of the bond portfolio and its reasonable market positions in the Canadian individual, pension, and reinsurance segments. These strengths are offset by the company's ongoing exposure to commercial mortgages and real estate and the uncertainties regarding the company's change in strategic direction within the U.S. individual life marketplace.
 Crown Life is presently undergoing a major transition, including the relocation of its head office to Regina, the redirection of its United States individual life segment, a strategy to improve overall investment quality and a major plan to shift away from marketing capital intensive products and toward fee-based products such as variable life and variable annuities. During this transition, A.M. Best expects that possible additional asset writedowns will be offset by Crown Life's more stable Canadian life insurance operations, as well as the revenue stream from Crown Life's existing book of United States individual life business.
 However, Crown Life's exposure to commercial mortgages and real estate (much of which was acquired through foreclosure) represents about 50 percent of the investment portfolio. The commercial mortgage portfolio has experienced a high level of delinquencies, and is susceptible to continued delinquencies, particularly in California, which comprises about 20 percent of the United States commercial mortgage portfolio. Additionally, the planned withdrawal from the GIC market and the significant amounts of GIC maturities in the next few years will make it difficult for Crown Life to reduce its exposure to commercial real estate.
 -- Gerling Global Life Insurance Company, Toronto, has received an initial 1993 Best's Rating of "A" (Excellent). This rating assignment reflects the insurer's position as a strategic subsidiary of Gerling- Konzern Versicherungs Beteiligungs AG, Cologne, Germany, as well as its strong capitalization, high-quality investment portfolio and improving levels of profitability.
 Gerling Global Life's investment portfolio is of good quality, with only a modest amount of bonds in lower quality instruments. In addition, the company's mortgage portfolio presents minimal risk since the entire portfolio is insured by the Canada Mortgage and Housing Corp. The company does not invest in commercial mortgages or real estate.
 The rating also acknowledges the pressures facing the insurer as it expands its niche position in the reinsurance market, where a large portion of its business consists of U.S. non-proportional accident and health risks. Offsetting this concern, though, is the company's success during the past several years in diversifying and improving the quality of its reinsurance risks.
 -0- 10/18/93 R
 /SECOND ADD TO FOLLOW/


CO: A.M. Best Company ST: New Jersey IN: INS SU: RTG

GK -- NY060AR -- 3524 10/18/93 15:51 EDT
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Publication:PR Newswire
Date:Oct 18, 1993
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