LONDON, Feb. 11 /PRNewswire/ -- Standard & Poor's today lowered its
long-term counterparty credit and insurer financial strength ratings on Swiss
Life (U.K.) PLC, a wholly owned subsidiary of Swiss Life/Schweizerische
Lebensversicherungs- und Rentenanstalt AG (A/Negative/--), to triple-'B'-plus
from single-'A'. At the same time, the ratings were removed from CreditWatch,
where they were placed on Oct. 10, 2001, reflecting a diminution in the
risk-based capitalization of the overall Swiss Life group as a result of
adverse investment market conditions. The outlook is stable.
The downgrade reflects current capital constraints at the consolidated
Swiss Life group level, limiting Swiss Life's ability to provide continued
financial support to Swiss Life (U.K.). Nevertheless, Standard & Poor's
expects the U.K. to remain one of Swiss Life's core markets, with Swiss Life
(U.K.) continuing to represent an important part of the group's international
network.
Major rating factors include:
-- Swiss Life (U.K.) has good capitalization. At year-end 2000, risk-based
capitalization was good, according to Standard & Poor's model. Coverage
of the required minimum margin (RMM) has remained stable, averaging a
good 1.8 times (x) over the past five years. In 2000, RMM coverage was
1.7x.
-- Offsetting this is Swiss Life (U.K.)'s good niche business position.
Swiss Life (U.K.) is a leading player in the niche U.K. protection
market. It predominantly sells individual and group protection to new
business via independent financial advisers, which Standard & Poor's
views as a fairly risky strategy in terms of assuming future business,
as these policies are extremely price sensitive.
-- A further offsetting rating factor is Swiss Life (U.K.)'s adequate
operating performance. On a published basis, ROA has averaged 0.25%
over the past five years. In 2000, ROA fell to 0.0% from 1.1% in 1999.
Statutory earnings in 2000 were hit by the fall in investment income.
Embedded value earnings are adequate due to the new business being
written on profitable terms, although profits are highly sensitive to
actual experience varying from the assumed basis.
OUTLOOK: STABLE
Standard & Poor's expects Swiss Life (U.K.) to continue generating
adequate earnings and to remain a dominant player in the group protection
market over the next few years. Capitalization is expected to remain
consistent with the ratings through the existence of a comprehensive
reinsurance program, although capital pressures at the parent company's level
may limit the amount of parental support available to Swiss Life (U.K.).
SOURCE Standard & Poor's
 back to top
Related links:
http://www.standardandpoors.com/ratings
CONTACT:
Carolyn Rajaratnam, +44-20-7847-7050, or Paul
Waterhouse, +44-20-7847-7084, both of Standard & Poor's
|
