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 BOSTON, March 16 /PRNewswire/ -- The New England, one of the nation's larger insurance and investment firms, will report a 1992 profit of $78 million in net income, a 63 percent increase from the previous year, at its annual meeting, March 17, 1993.
 The profit marked the fifth straight year of increasingly higher profits, reported Robert A. Shafto, president and CEO.
 Total sales, he reported about equalled the prior year's. Also, insurance-in-force grew 5 percent to $87.6 billion while individual premiums climbed at the same pace, up 5 percent to $1.2 billion.
 While sales varied by product lines, some products saw big upward swings, especially sales of variable life insurance, which jumped 75 percent, he said. Mutual fund sales were up 122 percent, twice the industry pace for mutual funds; and Group Pension sales also posted strong results, up 16 percent, he noted.
 The recession, he said, while having some impact, has not greatly affected the company's financial strength. "Despite modest adjustments, our average credit rating has remained in the excellent category; our capitalization (surplus ratio) has held steady throughout; and our plan to rebuild profits annually despite the economy has proven successful," said Shafto.
 As has been true for the industry, the recession's impact has been felt mainly in the company's real estate related investments, Shafto said. "But the impact has been manageable, and the company's response has been lower its exposure to these investments while increasing its holdings of high quality bonds."
 In the past several years, The New England has reduced its commercial mortgage holdings by more than $1 billion. Commerical mortgages now represent 27 percent of assets compared to 39 percent in the past, he noted. During the same period, its percentage of high quality bonds nearly doubled, he said.
 Another response was to lower expenses. Because of these efforts, Shafto stated the company's Home Office 1993 expenses are expected to be $16 million lower than in 1992. "Cost-cutting has become a competitive imperative in our industry as all expenses ultimately are reflected in pricing," he stated.
 The focus on expense control probably will escalate in the years ahead because investment returns will become less a differentiating factor as new government standards for capital adequacy prompt insurers to invest more conservatively and similarly, Shafto predicted.
 The continued, sharp, downward march of interest rates during 1992 also had the effect of lowering investment earnings and dividends for the industry last year. Life insurance dividends tend to track interest rates just as yields on certificates of deposit vary as interest rates vary, Shafto explained. In its case, The New England paid out $248 million in dividends in 1992 vs. $292 million in the prior year, he reported. "Even with that reduction, the company still maintains one of the industry's top histories of paying high dividends (according to annual surveys by A.M. Best, a leading insurance industry evaluator)," Shafto said.
 Future prospects for the life insurance industry look good, Shafto believes. Baby-boomers are entering their peak earning years he said. Companies that offer an array of life insurance, estate planning, retirement and investment products should do well, he continued.
 The ability to offer customers a variety of investment options will be key, he added. "If the explosive growth of the mutual fund industry has taught us anything, it is that consumers of financial products want choices," Shafto continued. Companies that have broad investment expertise and advanced technology to package and service a range of products will be better positioned, he stated.
 -0- 3/16/93
 /CONTACT: Peter N. Harrington of The New England, 617-578-2729/

CO: The New England ST: Massachusetts IN: FIN SU: ERP

CH -- NE008 -- 6592 03/16/93 13:30 EST
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Date:Mar 16, 1993

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