Auto-Owners Life Insurance Assigned `A' pi Rtg by S&P
23 June 1998
Auto-Owners Life Insurance Assigned `A' pi Rtg by S&P
NEW YORK--Standard & Poor's CreditWire 6/22/98-- Standard & Poor's today assigned its single-`A' pi insurer financial strength rating to Auto-Owners Life Insurance Co.The company is licensed in 27 states. The major line of business for Auto-Owners Life Insurance, a member of the Auto-Owners Insurance Group, is ordinary individual annuities. The company commenced operations in 1966 and the principle state in which it operates is Michigan.
The following factors are reflected in the single-`A' pi rating:
-- Extremely strong capitalization, as measured by capital adequacy ratio of over 300%;
-- Although the company is a member of the Auto-Owners Group, a large property and casualty group, this life insurance affiliate is rated on a stand-alone basis.
-- Operating performance is excellent, with an earnings adequacy ratio of 328.9%, as calculated by Standard & Poor's model;
-- While recent earning trends are improving, historical earnings volatility limits the current rating;
-- The company is geographically concentrated, with 47.9% of its business written in Michigan, which may expose it to regulatory risk; and
-- The company's investment risk profile is moderate, with 19.6% of invested assets in real estate and 32.8% in unaffiliated common stock.
Ratings denoted with a 'pi' subscript are insurer financial strength ratings based on an analysis of published financial information and additional information in the public domain. The ratings do not reflect in-depth meetings with an insurer's management nor do they incorporate material nonpublic information, and are therefore based on less comprehensive information than ratings without a pi subscript. Pi ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect an insurer's financial security occurs.
The pi rating process covers U.S insurers to which Standard & Poor's previously assigned quantitative (`q') ratings, and may include information beyond that used to derive the previous quantitative-only ratings. Pi ratings are not modified with 'plus' or 'minus' designations, nor are they subject to potential CreditWatch listings, Standard & Poor's said.
---CreditWire
