DUFF & PHELPS: UNITED COMPANIES LIFE INSURANCE COMPANY CLAIMS PAYING ABILITY RATING REAFFIRMED AT 'A'
CHICAGO, Sept. 3 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the `A' (Single-A) claims paying ability of United Companies Life Insurance Company (UCLIC). The rating reflects the company's improved profitability, efficiency of operations, and also the improved financial position of the parent company. Weighed against these positives are UCLIC's improving, but above peer group exposure to high- risk assets and still emerging marketing strategies. UCLIC is a stock life insurer based in Baton Rouge, Louisiana with admitted assets of $1.3 billion and adjusted surplus of $91 million at Dec. 31, 1992. UCLIC is a wholly owned subsidiary of United Companies Financial Corporation (UCFC) which is a holding company for insurance and mortgage lending and servicing companies. In the first half of 1993, UCFC completed a private preferred stock offering of $20 million at 6.5 percent. The proceeds of the preferred stock were used to restore capital following the $17 million first quarter loss, primarily due to a divestiture of a mortgage servicing subsidiary. UCFC's fixed obligation ratio decreased from 72 percent at March 31, 1993 before the offering to 64 percent as of June 30, 1993. Return on admitted assets was 1.51 percent for 1992 up from 1.22 percent for the prior year, and return on adjusted surplus increased from 13.1 percent in 1991 to 17.0 percent in 1992. The five year average for return on admitted assets and return on adjusted surplus is 0.90 percent and 9.7 percent, respectively. For 1993, pretax statutory operating income was $9 million through the second quarter excluding an extraordinary charge of $3 million related to a closed block of credit insurance. Operating leverage decreased from 15.28 times at yearend 1991 to 13.72 times at yearend 1992. Bonds represented 55 percent of total invested assets at yearend 1992 versus 29 percent for the previous yearend. Surplus exposure to below investment grade securities decreased from 65 percent to 33 percent for 1992. Mortgage loans decreased from 44 percent to 32 percent at yearend 1992 as a percent of invested assets. The mortgage portfolio is composed of approximately 52 percent residential/home equity loans and 48 percent commercial mortgages originated by the subsidiary of UCFC, United Companies Lending Corporation. Troubled real estate as a percent of surplus was 51 percent as of yearend 1992 which is higher than other peer companies. -0- 9/3/93 /CONTACT: Sandra A. Seidl, A.S.A., of Duff & Phelps Credit Rating Co., 312-368-3116/
CO: United Companies Life Insurance Company ST: Louisiana IN: INS SU: RTG
MP -- NY019 -- 8778 09/03/93 10:59 EDT
|Printer friendly Cite/link Email Feedback|
|Date:||Sep 3, 1993|
|Previous Article:||UNITED COMPANIES FINANCIAL CORPORATION REVOLVING CREDIT AGREEMENT RATING REAFFIRMED AT 'BBB' BY DUFF & PHELPS|
|Next Article:||MERRILL LYNCH $110 MILLION GLOBAL TELECOMMUNICATIONS MITTS RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --|