CENTRAL LIFE ASSURANCE COMPANY CLAIMS PAYING ABILITY RATING REAFFIRMED AT 'A+'
CHICAGO, Nov. 19 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the claims paying ability rating of Central Life Assurance Company at 'A+' (Single-A-Plus). Inherent in the company's rating has been the recognition of a strong distribution franchise and a good capital position relative to its business risks and investment and product mixes. Also recognized are the company's achievement of a lower risk profile for its invested assets, the emergence of a track record of good profitability, and a continuing reduction in operating leverage over the past several years. Balanced against these strengths, the rating reflects the significant capital support provided to subsidiary operations and the typical uncertainties associated with new business strategies, which, in the case of Central Life Assurance, have included the growth of subsidiary operations involved in the savings bank industry, mortgage banking, real estate development and real estate brokerage activities. In conjunction with these affiliated operations, Central Life Assurance Company is building alternative life insurance and annuity distribution methods. To expand the company's alternative distribution strategy, Central Resource Group, Inc. (CRG), currently a wholly owned subsidiary of Central Life Assurance Company, has announced an agreement in principle to merge its subsidiary, Midland Savings Bank, with Avondale Federal Savings Bank. The transaction is subject to regulatory approval. As a part of the transaction, CRG will undertake an initial public offering of part of its common stock to qualified Avondale depositors, employees and directors, as well communities served by Avondale and Midland. It is anticipated that, if successful, this public issuance will provide additional capital support to Central Life Assurance's subsidiary activities. Central Life Assurance Company is a mid-sized life insurance company with admitted assets of $2,340 million as of June 30, 1993. Operating leverage (adjusted liabilities to adjusted surplus) was 10.3 times at mid-year 1993. Central Life Assurance offers a complete line of participating whole life, universal life and term life insurance products, as well as annuity products. Central Life Assurance has been recognized as a low net cost provider of insurance and has a solid reputation for good service. The overall quality of the company's invested assets has improved since yearend 1990. Below investment grade bond exposure has been reduced to approximately industry average levels and total mortgage and real estate exposure has been and continues to be reduced. Although a still somewhat higher than average percentage of invested assets are in real estate-related assets, the mortgage loans are well diversified across property type. There is geographic concentration of the mortgage portfolio within California, Iowa and Texas, but the incidence of delinquency, restructure and foreclosure has been about one-half that of the industry. Barring further deterioration of real estate markets, the company anticipates a reduction of Central Life Assurance's level of problem loans, which are at a very manageable level relative to the company's adjusted surplus. -0- 11/19/93 /CONTACT: Kevin A. Ceurvorst, CFA of Duff & Phelps Credit Rating Co., 312-368-3144/
CO: Central Life Assurance Company ST: Illinois IN: INS SU: RTG
JG -- NY044 -- 6519 11/19/93 12:06 EST
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|Date:||Nov 19, 1993|
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