DUFF & PHELPS: CONNECTICUT MUTUAL LIFE INSURANCE COMPANY CLAIMS PAYING ABILITY RATING REAFFIRMED AT 'AA'
CHICAGO, July 28 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the `AA' (Double-A) claims paying ability rating for Connecticut Mutual Life Insurance Company. The rating, which reflects a very high claims paying ability, considers key strengths of the company, including: (1) a large, profitable block of whole life insurance; (2) the franchise value of a highly productive and loyal career agency force; and (3) management actions to enhance surplus growth through expense reduction efforts and dividend scale reductions. These positive factors are weighed against: (1) the poor profitability of the company's disability income lines of business; (2) the effect on earnings of underperforming mortgage and real estate investments due to weak real estate markets; and (3) the business risks typically associated with expansion of distribution channels and new product offerings. Connecticut Mutual is one of the largest mutual life insurance organizations in the United States with statutory admitted assets of $11.3 billion at March 31, 1993. Traditionally, the company has been a very successful marketer of individual life insurance products to wealthy individuals and small business owners through its career agency force. Connecticut Mutual's distribution force also markets group life and group disability products written by its Group America subsidiary. Its CM Life Insurance Company subsidiary writes most of the company's interest sensitive products. The company has been expanding its distribution channels and accelerating new product offerings, which should lead to better growth momentum into the future. In recent years, the company has been consolidating home office functions and enhancing the productivity of its distribution force. These efforts, along with dividend scale reductions, have enhanced surplus growth, helped to offset the impact of lost investment income from underperforming mortgage and real estate investments, and buffered the losses experienced in the company's disability income lines of business. Return on adjusted surplus for 1992 was 5.7 percent. The company's operating leverage has been declining in recent years and was 11.7 times at March 31, 1993. Connecticut Mutual's invested assets at yearend 1992 reflected efforts to reduce below investment grade bond exposure and reductions in new commitments for mortgage loan investments. Invested assets at Dec. 31, 1992, were divided: 53 percent-bonds; 26 percent- mortgages and real estate; 16 percent-policy loans; 1 percent-cash; 1 percent-equities; and 5 percent-investments in affiliates and other assets. Problem mortgage and real estate investments continue to reflect generally weak economic conditions in real estate markets. However, the company's liquidity and cash flow remain favorable relative to liability maturity and withdrawal patterns. -0- 7/28/93 /CONTACT: Kevin A. Ceurvorst, CFA of Duff & Phelps Credit Rating Co., 312-368-3144/
CO: Connecticut Mutual Life Insurance Company ST: Connecticut IN: INS SU: RTG
WB -- NY058 -- 7285 07/28/93 11:58 EDT
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|Date:||Jul 28, 1993|
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