DUFF & PHELPS: LIFE OF VIRGINIA LIFE INSURANCE COMPANY CLAIMS PAYING ABILITY RATING REAFFIRMED AT 'AA+'
CHICAGO, Jan. 7 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the "AA+" (Double-A-Plus) claims paying ability of Life of Virginia Life Insurance Company (LOV). The rating reflects the company's conservative capitalization and operating leverage, strategy for targeted business lines coupled with diversified distribution sources, improved profitability because of excellent expense control, prospects for continued earnings strength and stability, high quality asset portfolio, and position as the lead life insurer among Aon Corporation's (Aon) diversified portfolio of businesses. Weighed against these positives are moderate surplus increases due to continued dividend payments to Aon. Domiciled in Richmond, Virginia, LOV is the lead insurer of Aon's life insurance line. Aon, a diversified insurance holding company with $16.2 billion in GAAP assets, $2.3 billion in stockholder's equity, and a 26 percent debt to total capitalization ratio at Sept. 30, 1993, carries a "AA" (Double-A) senior debt rating with Duff & Phelps. Since acquisition by Aon in 1986, LOV's strategy has concentrated on diversifying distribution sources and targeting specialty business lines in order to reduce administration costs and improve profitability. LOV's product focus in the 1990s focus continues to be on capital accumulation products (although it has shifted more toward variable annuities), and interest sensitive life insurance products. LOV achieved the improvement in return on average assets of 1.82 percent in 1992, from 1.32 percent in 1991 (adjusted for a subsidiary dividend passed on to Aon) through the attainment of critical mass in several product lines, effective cost control in the home office, and efficiencies achieved in the various distribution sources from restructuring efforts. The ROA trend should remain solid because of strong margins on older blocks of traditional life insurance, despite lower margins on variable annuities. Aon is committed to maintaining LOV's surplus position in support of profitable businesses, and is flexible in its dividend requirements. LOV's normal dividend to Aon, after adjusting for Globe's dividend received, was $30 million in 1991 and 1992, or roughly one-half of previous years statutory operating gain. Operating leverage has remained in a narrow range of 11.5-12.0 times. LOV had statutory admitted assets of $6.8 billion and adjusted surplus of $483 million at Sept. 30, 1992. -0- 1/7/94 /Contact: Martha M. Butler, CFA , 312-368-3191, of Duff & Phelps Credit Rating Co./
CO: Life of Virginia Life Insurance Company; Aon Corporation ST: Virginia IN: INS SU: RTG
SP -- NY034 -- 0172 01/07/94 13:02 EST
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|Date:||Jan 7, 1994|
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