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BANKERS LIFE AND CASUALTY COMPANY CLAIMS PAYING ABILITY RATED 'AA-' BY DUFF & PHELPS

 CHICAGO, Aug. 26 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has rated the claims paying ability of Bankers Life and Casualty Company (Bankers) at 'AA-' (Double-A-Minus). The rating reflects the company's excellent profitability, strong asset quality, and distinctive marketing niche. Weighed against these positives is the cash requirements of Bankers' ultimate parent, Bankers Life Holding Corporation (BLH).
 Bankers is a stock life insurer based in Chicago with total admitted assets of $2.4 billion and adjusted surplus of $336 million at June 30, 1993. The ultimate parent, BLH, is a publicly-traded insurance holding company with total assets of $3.8 billion and shareholders' equity of $483 million at quarter-end. BLH was formed by Conseco Capital Partners, L.P. (partnership) for the acquisition of Bankers. In November 1992, the partnership purchased Bankers and one of its subsidiaries (Certified Life Insurance Company) from a subsidiary of I.C.H. Corporation (ICH) for $600 million.
 In March 1993, BLH issued 36 percent of its common stock via an initial public offering and received cash proceeds of $405 million. Proceeds from the offering were used to redeem all outstanding payment- in-kind preferred stock, retire all outstanding payment-in-kind subordinated notes, repay a portion of the senior term loan, contribute funds to the insurance subsidiaries, and for general corporate purposes. As a result of the recapitalization, Duff & Phelps upgraded the senior subordinated debt rating of BLH to `B' (Double-B) from `B+' (Single-B- Plus). BLH's primary source of cash to service debt is Bankers, which upstreams dividends to make principal and interest payments on surplus debentures issued by an intermediate holding company.
 Bankers specializes in selling individual health insurance to the senior citizen marketplace. The primary individual health insurance products sold are Medicare supplement, long term care, and comprehensive major medical. Medicare supplement insurance is Bankers' core product. This product provides coverage in the form of deductible and coinsurance coverage for many of the hospital and medical expenses not included in the federal government's Medicare health insurance program. Although the regulation of Medicare supplement plans has changed throughout the years, Bankers has continued to grow Medicare supplement premiums and policies in-force and maintain excellent profitability. The company's combined ratio (the relationship of benefits and expenses to premiums) improved from a very good 97.4 percent in 1991 to a superb 91.3 percent in 1992 on a GAAP basis. Bankers also markets group life and health insurance, individual annuities, and individual life insurance.
 Bankers has a high quality, liquid investment portfolio. Since November 1992, assets have been managed by Conseco Capital Management, Inc. (CCM). CCM is an active investor and utilizes a total return philosophy. Bonds represented 82 percent of Bankers' total invested assets at June 30, 1993. Over 94 percent of the bond portfolio was comprised of publicly-traded issues. Cash and equivalents made up 12 percent of total invested assets at mid-year. Bankers is slowly investing these funds in the bond sector. The company expects cash and equivalents to total between 3 percent and 5 percent of invested assets in future periods. Investment in subsidiaries (Certified Life Insurance Company) and policy loans represented 2 percent each of total invested assets. Bankers has nominal exposure to mortgage and real estate investments. At June 30, 1993, mortgage loans comprised less than 1 percent of total invested assets. Preferred equities represented the remaining portion of Bankers' invested assets.
 -0- 8/26/93
 /CONTACT: Julie A. Burke of Duff & Phelps Credit Rating Co., 312-368-3158/
 (BLH)


CO: Bankers Life and Casualty Company ST: IN: INS SU: RTG

SM -- NY033 -- 6097 08/26/93 11:28 EDT
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Publication:PR Newswire
Date:Aug 26, 1993
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