CHICAGO, May 4 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR)
reaffirmed the 'A+' (Single-A-Plus) claims paying ability rating of Shenandoah
Life Insurance Co. (Shenandoah). The rating is supported by the company's
impressive individual life sales during 1999 after the company embraced
distribution through independent marketing organizations (IMOs). Shenandoah's
balance sheet, typified by a high-quality/liquid investment portfolio and
solid capitalization, continues to be its strongest attribute. The company is
challenged by the competitiveness of its chosen markets and poor operating
performance in its group business. The Rating Outlook is Stable.
Shenandoah is a mutual life insurance company founded in 1914 and is based
in Roanoke, Va. The company focuses on selling individual life insurance and
annuities, as well as group life and health insurance. The company is
licensed in 25 states and the District of Columbia, with operations
concentrated in the southeast.
Shenandoah's strategic plan to distribute its individual products through
IMOs resulted in a 250 percent increase in annualized life sales in 1999.
Individual annuities continued to fall below expectations as the low interest
rate environment and bull stock market discouraged fixed-rate annuity
customers.
Profitability was negatively impacted by statutory strain from the strong
growth in life sales and generally weak results in the group line of business.
In 1999, Shenandoah posted a pretax return on average assets of 1.27 percent
and a return on average adjusted surplus of 6.4 percent, which were both down
from 1.63 percent and 9.7 percent, respectively, in 1998.
Shenandoah's surplus formation has been impressive as adjusted surplus
reached $117 million at December 31, 1999, doubling over the last five years.
On a risk-adjusted basis, the company's NAIC RBC ratio was strong at 365
percent of the company's action level. Shenandoah's investment portfolio
consists of high- quality/liquid assets. The company invests in preferred
securities and mortgage loans in an effort to keep its investment yield above
industry averages. Common stock gains have bolstered the company's surplus
position.
DCR's research is also available on Bloomberg at DCR, FirstCall's
BondCall Direct/Research Direct at http://www.firstcall.com and Multex at
http://www.multex.com, as well as through other third-party providers.
SOURCE Duff & Phelps Credit Rating Co.
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Related links:
http://www.dcrco.com
CONTACT:
Douglas M. Pawlowski, CFA, 312-368-2054,
pawlowski@dcrco.com, or Julie A. Burke, CPA, CFA, 312-368-3158,
burke@dcrco.com, both of DCR
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