Printer Friendly

DUFF & PHELPS: FORD LIFE INSURANCE CLAIMS PAYING ABILITY REAFFIRMED AT 'AA'; VISTA LIFE INSURANCE CLAIMS PAYING ABILITY RATING WITHDRAWN

 CHICAGO, Oct. 6 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the "AA" (Double-A) claims paying ability rating of Ford Life Insurance Company (Ford Life). The rating reflects the companies' high quality liquid investment portfolio, successful sales results in its first full year of issuing single premium deferred annuities (SPDA) through banks, good underwriting results in credit life, and strength of ownership structure. Ford Life, with admitted assets of $998 million and adjusted surplus of $126 million at yearend 1992, is a stock company wholly owned by American Road Insurance Company (American Road). American Road, also rated "AA" by Duff & Phelps, guarantees the obligations and liabilities of Ford Life and is ultimately operated by Ford Motor Credit Company (Ford Credit). The claims paying ability rating of Vista Life Insurance Company (Vista Life) was withdrawn at the company's request. Vista Life no longer plans to sell SPDAs in New York state.
 Ford Credit established Ford Life to sell credit life and credit disability insurance to Ford Motor car buyers in connection with vehicle installment financing through Ford Credit and other financial institutions. Although credit life and credit disability have always been profitable businesses for Ford Life, premium income growth has been declining over the last several years reflecting declining automotive sales and the overall decline in demand for automotive credit insurance. This prompted the company to enter the SPDA business, where it issued over $700 million in deposits in 1992. Ford Life's annuity program has been structured on a variable cost basis to use the excess infrastructure of other single premium deferred annuity (SPDA) writers and provide Ford Life an attractive return. The company uses a third-party marketing firm to distribute SPDAs through 100 banks (including Ford-owned First Nationwide) and brokers. Conseco's annuity operation provides administrative services and investment management, within conservative constraints established by Ford Life.
 Ford Life earned a $5 million net statutory gain in 1992 because of tax benefits, producing a return on adjusted surplus of 4.5 percent. Pretax operating loss was $2 million because the sizable business volume produced first year surplus strain (policy acquisition costs are expensed in the first year). On a GAAP accounting basis, pretax operating gain (where acquisition costs are expensed ratably as revenue is recognized) was $6 million.
 -0- 10/6/93
 /CONTACT: Martha M. Butler, CFA, of Duff & Phelps, 312-368-3191/
 (F)


CO: Ford Life Insurance Company; Vista Life Insurance Company;
 American Road Insurance Company; Ford Motor Credit Company ST: IN: INS AUT SU: RTG


SM -- NY052R -- 1156 10/06/93 14:12 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Oct 6, 1993
Words:423
Previous Article:INTERACTIVE DOG INTRODUCES REVOLUTIONARY ERA OF TELEVISION TAKES TOY WORLD BY STORM ... ON SHELF NOW
Next Article:TIAA-CREF ISSUES POLICY STATEMENT ON CORPORATE GOVERNANCE
Topics:

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters