DUFF & PHELPS: EQUITABLE LIFE INSURANCE COMPANY OF IOWA, USG LIFE AND ANNUITY COMPANY CLAIMS PAYING ABILITY RATED 'AA'
CHICAGO, July 16 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned an initial claims paying ability rating of "AA" (Double-A) to Equitable Life Insurance Company of Iowa (ELIC) and its wholly owned affiliate, USG Life and Annuity Company (USG). The ratings reflect the companies' strong operating success in the individual life insurance and annuity markets, well-managed investment portfolio, and reasonable utilization of operating leverage. Duff & Phelps has also assigned a commercial paper rating of Duff 1 to ELIC's parent holding company, Equitable of Iowa Companies (EQIC), reflecting the company's strong capitalization and earnings. EQIC is publicly traded on NASDAQ, and reported $5.4 billion in assets and $392 million in stockholders equity at March 31, 1993. The company also had $61 million in oustanding long-term debt and $38 million in commercial paper borrowings at that date, corresponding to a debt to total capital ratio of 20 percent. ELIC and USG specialize in offering life insurance and annuities to middle income groups through a number of distribution sources. ELIC is licensed in 45 states, and primarily sells universal life insurance and annuities through a sales force of 285 career agents, 136 closely affiliated producers, and over 400 independent brokers. USG was launched in 1987, and sells qualified and non-qualifed annuities through a sales force of 24,000 independent agents and 75 financial institutions. On a consolidated basis, ELIC and USG had statutory admitted assets of $4.8 billion and adjusted surplus of $326 million at year end 1992. Net operating income for 1992 was $47 million on premium and deposit volume of $981 million. The company has experienced strong asset growth over the last several years due to increased annuity volume at USG. The average annual return on adjusted surplus for the period 1988-92 was 11.8 percent. Operating leverage, as measured by the ratio of adjusted liabilities to adjusted surplus was 13.0 times at year end 1992 which is reasonable given the company's business mix. On December 31, 1992, consolidated investment assets were divided as follows: 89.0 percent-bonds, 5.5 percent-mortgages, 4.0 percent-policy loans, and 1.5 percent-cash and other assets. Fixed income investments are concentrated in mortgage-backed securities, utilities, and corporate bonds. Only 1 percent of all bonds are private placement issues. The investment quality of the bond portfolio has significantly improved as 94 percent of all fixed income investments were rated investment grade at year end 1992 compared with 90 percent at the end of 1991. Still, the ratio of non-investment grade bonds to adjusted surplus was 75 percent at year end 1992 which is above industry norms. The company's mortgage portfolio is well-seasoned and of very high quality. The company's exposure to troubled mortgages is well below industry averages. -0- 7/16/93 /CONTACT: James B. Auden, CFA, Duff & Phelps Credit Rating Co., 312-368-3146/ (EQIC) CO: Equitable Life Insurance Company of Iowa ST: Iowa IN: INS SU: RTG
LG -- NY020 -- 2431 07/16/93 11:41 EDT
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|Date:||Jul 16, 1993|
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