NEW YORK, June 18 /PRNewswire/ -- Standard & Poor's today assigned its
single-'A' counterparty credit rating and financial strength rating to
American Investors Life Insurance Co. At the same time, Standard & Poor's
affirmed its ratings on AmerUs Life Holdings Inc. (ALHI) and its subsidiary,
AmerUs Life Insurance Co. (AmerUs Life; see list below). The outlook is
stable.
The AmerUs Life group members include: AmerUs Life Insurance Co., American
Investors Life Insurance Co., Delta Life & Annuity Co. (triple-'Bpi'), and
Financial Benefit Life Insurance Co. (triple-'Bpi').
Major rating factors:
AmerUs Life's operating performance is strong as measured by its pretax
GAAP ROA of 85 basis points (bps) and Standard & Poor's earnings adequacy
ratio of 170%. AmerUs Life's earnings performance reflects its strong
earnings fundamentals for consistent mortality and persistency experience,
active spread, and expense management.
AmerUs Life's business review is strong due to its well-established
distribution relationships, specifically within AmerUs Life and American
Investors Life organizations. In 1998, total life insurance sales increased
13% from 1997 due to increased distribution productivity and capacity.
Although total annuity sales declined by 2% due primarily to market
conditions, American Investors' sales increased by 13% reflecting its
distribution strength.
Standard & Poor's considers AmerUs Life's strategy to be mildly aggressive
because of its appetite for mergers and acquisitions. AmerUs Life Group
operates in the ever-increasing competitive individual fixed annuity and life
insurance markets. Market positions in these segments will continue to be
pressured by ongoing consolidation.
AmerUs Life Group maintains a very strong risk-adjusted position as
measured by Standard & Poor's capital adequacy ratio of approximately 152%.
Capitalization has remained consistent from 1997 as dispositions in nonlife
subsidiaries (particularly AmerUs Bank), which had distinct capital needs,
have been offset to fund various actions at the holding company, in
particular, a stock buyback program.
The group's level of interest rate risk has increased when considering its
acquisitions of interest sensitive liabilities, which currently accounts for
70% of total reserves, and magnitude of mortgage-backed securities (MBS)
holdings (37% as of Dec. 31, 1998). Although the group's level of MBS is
considered above industry average, Standard & Poor's believes the group's
active asset/liability management strategy, pass-through nature of Delta's
annuity liabilities and well-structured MBS portfolio somewhat mitigates its
exposure to interest rate risk.
OUTLOOK: STABLE
Standard & Poor's expects pretax GAAP ROA to remain within the 80bps-90bps
range for 1999. Life insurance sales are also expected to increase 8% to 10%
from 1998 due to increased distribution capacity of its overall diversified
distribution system. Standard & Poor's also anticipates total leverage to
remain at or below 25%, which is management's target leverage position, and
capital adequacy ratio at AmerUs Life Group will remain above 150%.
Fixed-charge coverage is expected to remain in excess of 4 times,
Standard & Poor's said.
-- CreditWire
OUTSTANDING RATINGS AFFIRMED
Rating
AmerUs Life Insurance Co.
Counterparty credit rating A
Financial strength rating A
AmerUs Life Holdings Inc.
Counterparty credit rating BBB
Senior unsecured BBB
AmerUs Capital I
Preferred stock* BB+
AmerUs Capital II
Preferred stock* BB+
*guaranteed by AmerUs Life Holdings Inc.
SOURCE Standard & Poor's
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Related links:
http://www.standardandpoors.com/ratings
CONTACT:
Kevin Ahern of Standard & Poor's,
212-438-7160
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