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S&P Assigns Motorists Life Insurance Co. 'Api' Rating

6 December 1999

S&P Assigns Motorists Life Insurance Co. 'Api' Rating

    NEW YORK, Dec. 3 -- Standard & Poor's today assigned its
single-'Api' financial strength rating to Motorists Life Insurance Co.
    Motorists Life Insurance Co. is a regional life insurer licensed in eight
states and Canada.  The company portfolio consists of a variety of ordinary
life and annuity products.  Headquartered in Columbus, OH, it commenced
operations in 1965.
    The company is 70% owned by Motorists Mutual Insurance Co. (financial
strength rating single-'Api'), a large multiple line property and casualty
insurer.  The remaining 30% ownership rests with American Hardware Mutual
Insurance Co. (financial strength rating single-'Api'), a national property
and casualty insurer.  A common management agreement is in place between the
company and Motorists Mutual Insurance Co.
    Although the company is a member of The Motorists Mutual-American Hardware
Insurance Group, the rating does not include additional credit for implied
group support.
    Major Rating Factors:
    -- At year-end 1998, capitalization was extremely strong, in excess of
       300%, as measured by Standard and Poor's capital adequacy model.
    -- The company has displayed a history of volatility in premium revenue.
       Premium and annunity fund deposits increased 15% to $15 million in 1998
       from $13 million in 1997, while capital increased 6% to $51 million
       from $48 million in 1997.
    -- At year-end 1998, geographic and product line concentration was high,
       with the majority of direct business written in the midwestern states.
       Geographic and product line concentration can expose a company to
       regulatory, economic, and competitive risk.
    -- Operating performance is marginal, with the average return on assets
       from 1993 to 1998 at 1%.  The company has taken action to expand their
       distribution into new states and new business segments.

    'Pi' ratings, denoted with a 'pi' subscript, are insurer financial
strength ratings based on an analysis of an insurer's published financial
information and additional information in the public domain.  They do not
reflect in-depth meetings with an insurer's management 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 the
insurer's financial security occurs.  Ratings with a 'pi' subscript are not
subject to potential CreditWatch listings.
    Ratings with a 'pi' subscript generally are not modified with 'plus' or
'minus' designations.  However, such designations may be assigned when the
insurer's financial strength rating is constrained by sovereign risk or the
credit quality of a parent company or affiliated group, Standard & Poor's
said. -- CreditWire