A.M. Best Affirms Ratings and Revises Outlook to Negative fo
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Copyright: Business Wire
Source: Business Wire
Wordcount: 694
Business Editors
Oldwick, NJ - (BUSINESS WIRE) - March 27, 2009 - AM Best Co. has affirmed the ratings (FSR) of A (Excellent) and A-(Excellent) and issuer credit ratings (ICR) of "a" and "a-" of the key life / health insurance subsidiaries of Great American Financial Resources, Inc. (GAFRI), which is wholly owned by American Financial Group, Inc.. (AFG) (Cincinnati, OH) (NYSE: AFG). The outlook for the above opinion has been revised from stable to negative.
In addition, AM Best affirmed the FSR of B (good) and CIHR to "BBB" from the Central Reserve Life Insurance Company (Cleveland, OH), Continental General Insurance Company (Omaha, NE) and Provident American Life Insurance Company and of Health (Cleveland, OH). The three companies are part of the GAFRI health insurance and are subsidiaries of Ceres Group, Inc. (Ceres), which was acquired by GAFRI in August 2006. The outlook for these ratings has been revised from positive to stable. (See link below for a detailed list of companies and notes.)
GAFRI reflect its performance ratings of profitable, positive cash position, solid risk-adjusted capitalization and the breadth and depth of its distribution channels. In addition, its presence in the various tax deferred market provides a stable liability structure evidenced by a strong re-load protection and above average persistency. The acquisition of the GAFRI shares not already owned by AFG and its affiliates in the third quarter of 2007, in addition to costs savings and simplification of the overall organizational structure AFG AFG-reinforces its commitment to operation organized under GAFRI.
The main offsetting factor is the opinion of the relatively high concentration of fixed annuity reserves, AM Best, which considers as a very competitive company in line with interest rate sensitivity. GAFRI the recent growth has been focused on products of single premium annuity with a single-rate levels of credit, which May be more sensitive to the risks of disintermediation that its recurring premium business. AM Best believes that the individual fixed annuity line continues to be challenged by competition from traditional providers of pension and other financial services products, as well as the persistence of low interest rates. In addition, as GAFRI strengthens its presence in the equity indexed annuity market through substantial premium growth in recent years, global demand for these products has decreased due to the relevance of products and regulatory issues, potentially pressure on premium growth and profitability in the short term. GAFRI's efforts to expand its operations beyond the annuity market continues to focus on additional health products. AM Best notes that these products are subject to regulatory and market risks, which have the potential to impact retention and profitability.
The review of the negative rating outlook for the key life / health subsidiaries AM Best reflects the negative outlook on the industry because of the current economic environment, as well as exposure group significant financial sector, corporate bonds and real estate investments, particularly non-residential securities backed by mortgages. In 2008, losses have exceeded the group's investments statutory net operating gain, which prompted a capital of the parent company. AM Best notes that while GAFRI has limited the exposure of all commercial mortgage loans and investments in residential and commercial mortgage-backed securities are concentrated in the higher brackets, the group continues to maintain a loss not conducted within its investment portfolio of approximately $ 1.5 - billion at the end of 2008. GAFRI Although the overall exposure of the investment is largely in line with its peers in the short-term capital growth may be limited by the potential impact of additional asset impairments.
For a complete list ofGreat American Financial Resources, Inc. and S FSRS ICRS, please visit www.ambest.com/press/032703gafri.pdf.
The main methods used in the determination of these opinions, including the methodologies and other factors, may have been taken into consideration, can be found at www.ambest.com / opinions / methodology.
Founded in 1899, AM Best Company is a full-service credit rating organization dedicated to serving the financial and service industries, including insurance companies, banks, hospitals and suppliers of system health care.
Source: Business Wire
Wordcount: 694
Business Editors
Oldwick, NJ - (BUSINESS WIRE) - March 27, 2009 - AM Best Co. has affirmed the ratings (FSR) of A (Excellent) and A-(Excellent) and issuer credit ratings (ICR) of "a" and "a-" of the key life / health insurance subsidiaries of Great American Financial Resources, Inc. (GAFRI), which is wholly owned by American Financial Group, Inc.. (AFG) (Cincinnati, OH) (NYSE: AFG). The outlook for the above opinion has been revised from stable to negative.
In addition, AM Best affirmed the FSR of B (good) and CIHR to "BBB" from the Central Reserve Life Insurance Company (Cleveland, OH), Continental General Insurance Company (Omaha, NE) and Provident American Life Insurance Company and of Health (Cleveland, OH). The three companies are part of the GAFRI health insurance and are subsidiaries of Ceres Group, Inc. (Ceres), which was acquired by GAFRI in August 2006. The outlook for these ratings has been revised from positive to stable. (See link below for a detailed list of companies and notes.)
GAFRI reflect its performance ratings of profitable, positive cash position, solid risk-adjusted capitalization and the breadth and depth of its distribution channels. In addition, its presence in the various tax deferred market provides a stable liability structure evidenced by a strong re-load protection and above average persistency. The acquisition of the GAFRI shares not already owned by AFG and its affiliates in the third quarter of 2007, in addition to costs savings and simplification of the overall organizational structure AFG AFG-reinforces its commitment to operation organized under GAFRI.
The main offsetting factor is the opinion of the relatively high concentration of fixed annuity reserves, AM Best, which considers as a very competitive company in line with interest rate sensitivity. GAFRI the recent growth has been focused on products of single premium annuity with a single-rate levels of credit, which May be more sensitive to the risks of disintermediation that its recurring premium business. AM Best believes that the individual fixed annuity line continues to be challenged by competition from traditional providers of pension and other financial services products, as well as the persistence of low interest rates. In addition, as GAFRI strengthens its presence in the equity indexed annuity market through substantial premium growth in recent years, global demand for these products has decreased due to the relevance of products and regulatory issues, potentially pressure on premium growth and profitability in the short term. GAFRI's efforts to expand its operations beyond the annuity market continues to focus on additional health products. AM Best notes that these products are subject to regulatory and market risks, which have the potential to impact retention and profitability.
The review of the negative rating outlook for the key life / health subsidiaries AM Best reflects the negative outlook on the industry because of the current economic environment, as well as exposure group significant financial sector, corporate bonds and real estate investments, particularly non-residential securities backed by mortgages. In 2008, losses have exceeded the group's investments statutory net operating gain, which prompted a capital of the parent company. AM Best notes that while GAFRI has limited the exposure of all commercial mortgage loans and investments in residential and commercial mortgage-backed securities are concentrated in the higher brackets, the group continues to maintain a loss not conducted within its investment portfolio of approximately $ 1.5 - billion at the end of 2008. GAFRI Although the overall exposure of the investment is largely in line with its peers in the short-term capital growth may be limited by the potential impact of additional asset impairments.
For a complete list ofGreat American Financial Resources, Inc. and S FSRS ICRS, please visit www.ambest.com/press/032703gafri.pdf.
The main methods used in the determination of these opinions, including the methodologies and other factors, may have been taken into consideration, can be found at www.ambest.com / opinions / methodology.
Founded in 1899, AM Best Company is a full-service credit rating organization dedicated to serving the financial and service industries, including insurance companies, banks, hospitals and suppliers of system health care.
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