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A.M. BEST RELEASES 1993 BEST'S RATINGS FOR 163 INSURERS

    OLDWICK, N.J., April 26 /PRNewswire/ -- A.M. Best Company today released the 1993 Best's Ratings of 96 property/casualty insurers and 67 life/health companies, including Metropolitan Life Insurance Company, Travelers Insurance Company (life/health) and the Progressive Insurance Group.
    Based on the evaluation of year-end 1992 financial results and subsequent relevant events, Best's Ratings will be released on a weekly basis through June. To date, Best's Ratings have been assigned to 336 property/casualty companies and 159 life/health insurers. Best's Ratings are continuously monitored throughout the year with formal rating reviews performed on six-month and nine-month financial results.
    Rating rationales for four property/casualty groups and four life/health companies are presented below:
    The Guardian Life Insurance Company of America, New York, was assigned a 1993 Best's Rating of "A++" (Superior). The company's superior financial strength was affirmed and its rating level of "A++" was unchanged.
    This rating reflects the company's conservative and profitable operating strategy, very strong capitalization, high-quality investment portfolio and excellent liquidity posture.  In addition, this rating acknowledges the strong positions which the company maintains in the small to medium case size accident and health and professional and upper-income individual life insurance segments.
    "Although potential state or federal health care reform pose a threat to the company's accident and health operations, A.M. Best believes that Guardian's critical mass, efficient operations and strategic approach toward building relationships in the managed care arena are likely to provide for its continued presence in this market despite the current regulatory uncertainty," according to Larry G. Mayewski, senior vice president of Best's life/health division.
    Guardian's 1992 admitted assets totaled nearly $7.9 billion, of which approximately $4.4 billion represented investment-grade bonds, cash and short-term securities. The Guardian ranks among the 50 largest life/health insurers in the U.S. when measured by total assets.
    Due to its strategic role as a subsidiary of The Guardian Life Insurance Company of America, The Guardian Insurance and Annuity Company, Inc. (GIAC), New York, also was assigned a 1993 Best's Rating of "A++" (Superior). The company's superior financial strength was affirmed and its rating level of "A++" was unchanged. This rating is based on the consolidated performance of the parent and this subsidiary. GIAC serves as a strategic marketing arm of The Guardian, through which variable life and annuity products are distributed.
    Jackson National Life Insurance Company, Lansing, Mich., was assigned a 1993 Best's Rating of "A+" (Superior).  The company's superior financial strength was affirmed and its rating level of "A+" was unchanged.
    "This rating assignment reflects the company's strong earnings performance and reduced investment risk in recent years, its good risk-adjusted capitalization and excellent liquidity position," according to Larry G. Mayewski, senior vice president of Best's life/health division. This rating also acknowledges the competitive advantage Jackson National Life derives from its cost-efficient production and administration of product offerings and the strong performance of its distribution network.
    Since its acquisition in 1986 by Prudential Corporation, plc, a London-based financial services company, Jackson National Life has concentrated its sales activity in the highly competitive market of interest-sensitive products, primarily single- and flexible-premium deferred annuities and interest-sensitive whole life contracts. Substantial growth has been experienced over the past five years as total assets (consolidated with its subsidiary) have increased over three and one-half times the respective 1987 level.
    Since year-end 1990, Jackson National Life Insurance Company has considerably reduced its holdings of high-yield securities.  At year-end 1992, non-investment-grade bonds represented 9-1/2 percent of total assets, a 1 percent increase from the reported prior year level. "Through strong operating profitability and surplus contributions received from its parent concern, the company has increased capital and surplus funds nearly four-fold over the past five years.  Strong operating cash flow, combined with investment-grade bonds, cash and short-term holdings totaling $12.1 billion at year end, provide the company with an excellent liquidity position," Mr. Mayewski added.
    Due to its strategic role as a subsidiary of Jackson National Life Insurance Company, Jackson National Life Insurance Company of Michigan, Lansing, was assigned a 1993 Best's Rating of "A+" (Superior). The company's superior financial strength was affirmed and its rating level of "A+" was unchanged.  This rating is based on the consolidated performance of the parent and the subsidiary.
    On Dec. 1, 1992, the company and its parent entered into a bulk cession and assumption reinsurance agreement whereby all policies owned by residents of the state of Michigan were transferred from Jackson National Life Insurance Company to Jackson National Life Insurance Company of Michigan.  Jackson National Life Insurance Company of Michigan operates as a marketing arm of its parent. At year end, the company maintained liquidity and capitalization levels which closely mirrored that of the parent organization.
    Metropolitan Life Insurance Company, New York, was assigned a 1993 Best's Rating of "A++" (Superior). The company's superior financial strength was affirmed and its rating level of "A++" was unchanged.
    This rating assignment reflects Metropolitan Life's conservative financial management strategies, its profitable operations, strong capitalization and excellent liquidity posture.  In addition, this rating acknowledges the company's prominent market position in its principal lines of business, which is a reflection of its substantial and diverse distribution sources.  Offsetting these favorable items is the company's continued exposure to the weakened real estate market, and the threat of federal health care reform to its group accident and health operations.
    However, "A.M. Best believes that the diversity, stability and scale of its businesses, combined with its exceptional cash flows and investment management capabilities, provide strong insulation from the adverse impact of its investment exposure to weakened mortgage and real estate investments," said Larry G. Mayewski, senior vice president of Best's life/health division.  In addition, the dominant position which Metropolitan Life maintains in the large case accident and health market, along with its extensive managed care facilities, have positioned the company to remain competitive in the accident and health arena -- notwithstanding current proposals for health care reform, Mr. Mayewski noted.
    At year-end 1992, Metropolitan Life's liquidity position was supported by nearly $58 billion of investment-grade bonds, cash and short-term investments (approximately 60 percent of its general account invested assets). The company ranks as the second largest life/health insurer in the U.S. when measured by total assets.
    Due to its strategic role as a subsidiary of Metropolitan Life Insurance Company, Metropolitan Tower Life Insurance Company, Newark, DE, has been assigned a 1993 Best's Rating of "A++" (Superior). This rating is based on the consolidated performance of the parent and this subsidiary. Metropolitan Tower Life serves as a marketing arm of Metropolitan Life Insurance Company, through which a declining volume of variable universal life insurance policies have been sold.
    In addition, Metropolitan Insurance and Annuity Company, Newark, Del., a strategic subsidiary of Metropolitan Life Insurance Company, 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. The company had been active as a distribution arm for Metropolitan Life, through which variable products were sold. However, present activities are confined to the servicing of existing businesses, as new business is not actively solicited.
    NAC Re Group, Greenwich, Conn., was assigned a 1993 Best's Rating of "A" (Excellent). The group's excellent financial strength was affirmed and its rating level of "A" was unchanged.
    The rating applies to NAC Reinsurance Corporation and its two wholly-owned affiliates, Greenwich Insurance Company and Indian Harbor Insurance Company, which reinsure with the parent.  The rating reflects the group's excellent capitalization, good operating performance and strong market position in the broker reinsurance sector.
    These positive rating factors are derived from the group's solid national core account strategy by providing underwriting expertise and substantial reinsurance capacity for national account companies.  The company is recognized as a lead reinsurer, which gives it flexibility in setting price and terms.
    "This strategy, combined with the company's expansion into offering facultative coverages, positions it to capitalize on the current consolidation in the reinsurance sector, which is shifting business to fewer, larger and stronger reinsurers," according to John H. Snyder, senior vice president of Best's property/casualty division.  In addition, the issuance of 8 percent seven-year senior notes, as well as the sale of 5.25 percent 10-year convertible subordinated debentures, have raised $200 million and increased the group's 1992 surplus 67 percent to $384 million. The parent company's debt-to-equity ratio remains a modest 65 percent.
    The group's overall operating results deteriorated in 1992 due to the severity and number of claims related to catastrophes, which raised the combined ratio by over 19 points to 126, Mr. Snyder added. The reinsurer has taken several steps to reduce future potential exposure, including non-renewal of specific treaties, which accounted for the majority of Hurricane Andrew losses, shifting its book from pro-rata to excess-of-loss and establishing occurrence limits on remaining pro-rata treaties.  The group continued to capitalize on market opportunities through additional capital raising efforts and increased net premium writings of 15 percent due to both increased submissions from existing clients and expansion in new lines, such as surety, aviation, ocean marine and automobile warranty.  The group's capitalization remains very conservative, with $268 million in writings supported by $384 million in premium. It also maintains a solid investment portfolio with 80 percent of total assets invested in "A" or higher rated bonds.  NAC Reinsurance Group is among the top 10 reinsurers in the country with $1.3 billion in assets.
    New Jersey Manufacturers Group, Township of Ewing, N.J., was assigned a 1993 Best's Rating of "A" (Excellent). The group's excellent financial strength was affirmed and its rating level of "A" was unchanged.
    The rating applies to the company and an affiliate, New Jersey RE- Insurance Company, which writes on a direct basis, as well as being a captive reinsurer for its parent.  The rating reflects management's conservative operating strategy, superior financial performance and above-average capitalization.  These positive rating factors are derived from its significant competitive expense advantage as a direct writer utilizing a captive agency force and commanding market position in the state of New Jersey.  The group is the leading workers' compensation writer and fourth largest private passenger auto carrier in the state.
    "Unfavorable underwriting results and a generous policyholder dividend policy caused operating results to deteriorate in recent years, with combined ratios rising to the mid-130s," according to John H. Snyder, senior vice president of Best's property/casualty division. These results are due to an upward trend in medical costs and increased claim frequency that accompanied the economic conditions in the early 1990s.  Auto results have also been negatively impacted by unprofitable mandatory residual market depopulation quotas imposed by the state, as well as assessments and surtaxes associated with the state's workers' comp and automobile residual markets, he added.
    Historically, the group's strong underwriting performance and low expense load enabled a large portion of premium to be returned to policyholders in the form of dividends.  However, the deterioration of results in recent years has led to significant reductions in these policyholder dividends in order to conserve capital, Mr. Snyder said. The group's underwriting results have stabilized and should improve due to a number of actions being taken by management that include rate increases and more disciplined underwriting.
    Orion Capital Companies, Farmington, Conn., was assigned a 1993 Best's Rating of "A-" (Excellent). The group's excellent financial strength was affirmed and its rating level of "A-" was unchanged.
    The rating applies to six intercompany pool members, led by Security Insurance Company of Hartford and one affiliate that receives the rating of its parent that is a pool member.  The group's rating reflects Orion Capital's continued strong operating results, improved leverage and leadership position in profitable niche markets, including specialty workers' compensation and professional liability insurance for architects and engineers.  These positive rating factors are offset somewhat by continued, but diminishing, adverse loss reserve development related to discontinued business written in the early 1980s.
    "Orion's improved operating performance and capitalization reflects several operational changes executed by management in recent years, enabling the group to tighten its underwriting and pricing controls," said John H. Snyder, senior vice president of Best's property/casualty division. The group targets profitable market niches which includes offering workers' compensation coverages to insureds operating in low-hazard industries and favorable regulatory environments as well as offering professional liability coverages written on claims-made forms with defense costs included within policy limits for architects and engineers.  Its 1992 combined ratio of 105 is over 10 points better than the industry, reflective of strong current accident-year results tempered by continued adverse reserve development for business written in the early 1980s, Mr. Snyder said.
    Capitalization levels, with $567 million in premiums supported by $383 million of surplus, continue to improve from strong operating earnings, and substantial investment gains from Orion's significant equity interest in Guaranty National. The group has improved both its operating and financial leverage by reducing its non-investment-grade bond holdings and its debt-to-equity ratio to a manageable 40 percent, Mr. Snyder added.
    In addition, Security Reinsurance Company, a professional reinsurer affiliate, 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.
    Orion Capital Companies is among the top 75 property/casualty insurers with $1.5 billion in total assets at year-end 1992.
    Progressive Insurance Group, Mayfield Heights, Ohio, was assigned a 1993 Best's Rating of "A+" (Superior). The company's superior financial strength was affirmed and its "A+" rating level was unchanged.
    The rating applies to the group's 14 intercompany pool members, led by Progressive Casualty Insurance Company, and one affiliate that is reinsured by the pool. Progressive's rating reflects management's expertise in the nonstandard automobile market, superior underwriting
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Date:Apr 26, 1993
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