UNION CENTRAL LIFE INSURANCE COMPANYCLAIMS PAYING ABILITY UPGRADED TO 'A+' FROM 'A'
CHICAGO, Sept. 1 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has upgraded the claims paying ability rating of Union Central Life Insurance Company (Union Central) from `A' (Single-A) to `A+' (Single-A-Plus). The rating reflects the company's diverse and well- established blocks of businesses, consistent operating profitability, a reasonable capital position and an experienced management team. These strengths are balanced against the need to develop sales momentum in all business lines and weak operating results in the individual disability income business. Union Central is a mutual life insurance company based in Cincinnati, Ohio with admitted assets of $3.4 billion and adjusted surplus of $238 million at June 30, 1993. Currently, Union Central owns 73 percent of Manhattan Life Insurance Company, a guarantee capital stock life insurance company domiciled in New York. Management, products, operations and marketing strategies are unique to each company. However, Union Central and Manhattan Life share investment, human resource and data processing facilities. Union Central is licensed in all 50 states and has three core businesses, each with its own separate marketing system. The Individual business (41 percent of year-end 1992 premium and deposits) includes traditional whole life, universal life and disability income products. These products are sold through a combination of career and special marketing agencies. Going forward, Union Central plans to be selective in recruiting new agencies while growing the number of agents within each agency. The individual field force cross-sells in the other two core businesses, Retirement Plans and Group. The Retirement Plans business (51 percent) offers individual single premium deferred annuities, individual variable annuities, and group tax qualified plans, including 401(k) plans. The tax qualified plans include investment, compliance and administration services. Union Central has six Retirement Plans sales offices with nine seasoned group representatives. The third core business is group life and health (8 percent). Union Central withdrew from the group medical market in 1989 and is only offering group life and disability products. Group general agents produce 65 percent of the Group business through four regional offices. Third party administrators sell 5 percent of the Group business but Union Central does not provide any of the medical stop loss coverage. The remaining 30 percent of the Group line is sold through the Individual field force. Premium and deposits decreased for 1992 from $473 million to $454 million in 1992 due to a one time $45 million reinsurance premium received in 1991. The growth rate over the four year period ending in 1992 was 3.5 percent primarily due to annuities. Pretax, predividend, operating gain increased over 100 percent over the last five years to $44 million in 1992. Net operating gain has also increased over the same period to $22 million. Operating leverage has fallen over the last five years from 20.18 times at year-end 1988 to 13.97 times at year-end 1992. Investments are managed by Carillon Advisors, Inc., a wholly owned subsidiary of the company. Bonds represent 74.1 percent of invested assets as of June 30, 1993. The majority of the bond portfolio, 62 percent, was invested in collateralized mortgage obligations, which do not carry default risk, but prepayment risk. Union Central manages the prepayment risk within the asset/liability management system. Total below investment grade bonds are 51.5 percent of adjusted surplus as of yearend 1992. Union Central stopped investing in mortgage loans in 1991. Mortgage loans represented 17.2 percent of invested assets at June 30, 1993. The company has a mortgage portfolio geographic exposure in the west, but has avoided downtown areas and has a preference for medical properties. Surplus exposure to troubled real estate was 18.6 percent as of Dec. 31, 1992. -0- 9/1/93 /CONTACT: Sandra A. Seidl, A.S.A. of Duff & Phelps Credit Rating Co., 312-368-3116/
CO: Union Central Life Insurance Company ST: Ohio IN: INS SU: RTG
SH -- NY030 -- 7893 09/01/93 10:57 EDT
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|Date:||Sep 1, 1993|
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