UNITED OF OMAHA INSURANCE COMPANY CLAIMS PAYING ABILITY REAFFIRMED AT 'AA' BY DUFF & PHELPS
CHICAGO, Aug. 5 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the claims paying ability rating of United of Omaha Life Insurance Company (United) and its parent, Mutual of Omaha Insurance Company (Mutual), at 'AA'. Mutual and United, two separate organizations, are rated as a consolidated entity because they have a single management team, and complimentary business operations that are managed as one. The ratings reflect the consolidated company's (the Company) excellent capitalization, strong market positions in individual and group health, expense initiatives that have improved performance measures, and high quality assets. Weighed against these positives are the uncertainty of the effects of healthcare reform on the company's health businesses, the earnings' volatility inherent in indemnity health insurance and United's above average concentration in commercial mortgages. Mutual is a leading writer of individual accident and health insurance in North America and also writes small group coverage. United is a stock company, wholly owned by Mutual, focused on group life, health and pension and individual life insurance and annuity operations. At Dec. 31, 1992, consolidated assets were $7.4 billion and adjusted surplus was $966 million. Consolidated capitalization, which grew 16 percent in 1992 to 13.1 percent of total assets, is considered excellent. Consolidated operatings leverage, which benefits from low operating leverage of 2.09 times at Mutual, fell to 6.58 times at yearend 1992. Consolidated premiums in 1992 were 9 percent individual life, 34 percent individual health, 9 percent individual annuities, 4 percent group life, 32 percent group health and 12 percent pension. The company generated net operating gain of $94.5 million. Return on assets improved from 1.32 percent in 1991 to 1.99 percent in 1992, return on adjusted surplus was 10.5 percent. Operating profitability has improved in recent years after the company restructured its operations and distribution force, focusing on profitability, persistency and expense control. While A&H premiums dominate the company's premium profile, strong market positions in both individual and group A&H, good administrative systems and a shift away from pure indemnity products, should allow it to weather the significant healthcare reforms under consideration by the Clinton administration. The company's strategy is focused on risk-sharing products and managed care. Individual A&H business is still largely fully-insured; the company increasingly uses managed care delivery systems like PPOs and HMOs, and benefits in pricing from its large market share and expense initiatives. Traditional group indemnity business was 50 percent of 1992 premium and equivalents as the Company has moved to ASO and risk- sharing business. The company expects to continue to fill the market need for Medicare supplemental products, but it also targeting non-threatened needs-based products like disability income, life insurance and pension products. -0- 08/05/93 CONTACT: Martha M. Butler, CFA of Duff & Phelps Credit Rating Co. 312-368-3191 CO: MUTUAL OF OMAHA INSURANCE COMPANY; UNITED OF OMAHA INSURANCE CO.
IN: INS SU: RTG ST: NE
-- NY062 -- X240 08/05/93
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|Date:||Aug 5, 1993|
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