DUFF & PHELPS: THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, GUARDIAN INSURANCE AND ANNUITY COMPANY CLAIMS PAYING ABILITY RATING RATED 'AAA'
CHICAGO, Oct. 26 /PRNewswire/ -- Duff & Phelps Credit Rating Co. assigns a `AAA' (Triple-A) claims paying ability rating to The Guardian Life Insurance Company of America ( The Guardian). The rating reflects The Guardian's: solid profitability allowing it to maintain one of the industry's highest statutory capitalization ratios, while holding a strong policyholder dividend history; distinct market position in group life and health for small to mid-sized employers in the northeastern U.S.; expansion of its successful individual insurance operations; and good asset quality. These strengths far outweigh The Guardian's participation in an industry-wide downturn in individual disability income, and their higher than industry average level of equity investments. Although The Guardian is exposed to legislative uncertainties concerning group health, the company's level of capital provides comfort that it could be redeployed into other profitable and less vulnerable individual life and group life & health products. Duff & Phelps also rates the claims paying ability of The Guardian's wholly owned subsidiary Guardian Insurance & Annuity Company (GIAC) `AAA' (Triple-A). GIAC's variable life and annuity businesses are integral to The Guardian and GIAC receives significant management and financial support from its parent. The Guardian, with June 30, 1993, consolidated admitted assets of $11.3 billion, is one of the country's top 10 providers of group health insurance. Managed care is expected to account for one-half of over $400 million in group medical sales in 1993. The company's movement toward managed care and the relative size of its group health operation should place it in a reasonable position under proposed healthcare reform. The Guardian has established a successful position in traditional individual life insurance and experienced 28 percent sales growth in 1992 by expanding its career distribution force and through increased marketing efforts. Through GIAC, The Guardian distributes variable life and annuities through the career force and securities and brokers. Variable products have reported substantial sales growth over the last three years because consumers in a low interest rate environment are willing to take investment risk to enhance their returns. Because of its excess surplus position, The Guardian also assumes reinsurance, or provides "surplus relief" to other companies. The Guardian's invested asset mix is underweighted in mortgages and real estate at 10 percent and 1 percent, respectively, overweighted in equities at 12 percent, compared with the industry and Duff & Phelps' `AAA' peers. The bond portfolio, which makes up 64 percent of invested assets, is of very high quality with less than 5 percent below investment grade securities. Troubled mortgage experience is a fraction of the industry average and the equity portfolio has consistently outperformed the S&P 500. The Guardian's consolidated net operating gain of $118 million in 1992 produced a 10 percent return on average adjusted surplus and fell only slightly from $126 million the previous year. Consolidated adjusted surplus increased 16 percent in 1992 to $1.3 billion, representing 12 percent of admitted assets, and operating leverage was a strong 5.34 times at yearend 1992. Adjusted surplus has already increased an additional $165 million in the first six months of 1993 due to excellent profitability and investment gains. The company uses no debt or borrowed funds. -0- 10/26/93 /CONTACT: Martha M. Butler, CFA of Duff & Phelps Credit Rating Co., 312-368-3191/
CO: The Guardian Life Insurance Company of America ST: IN: INS SU: RTG
TS -- NY043 -- 6848 10/26/93 11:19 EDT
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|Date:||Oct 26, 1993|
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