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S&P Affirms American General Assurance Co. 'BBpi' Rtg

19 December 2000

S&P Affirms American General Assurance Co. 'BBpi' Rtg

    NEW YORK--Standard & Poor's--Dec. 19, 2000--Standard & Poor's today affirmed its double-'Bpi' financial strength rating on American General Assurance Co.
    The rating is based on marginal capitalization and weak profitability, partially offset by strong liquidity. The company mainly writes credit life and disability insurance, marketed primarily though financial institutions and automobile dealerships. Based in Schaumburg, Ill., and licensed in 50 states and the District of Columbia, it began operations in 1930.

	   Major Rating Factors:

--  Capitalization is marginal, as indicated by a Standard & Poor's
    capital adequacy ratio of 80.7%. The company's ratio of capital
    and surplus to liabilities was 12.6% at year-end 1999.

--  Profitability is poor, with a five-year average return on assets
    of 0.7%. Returns have also been volatile, ranging between negative
    2.3% and positive 2.1%.

--  The company has a narrow product-line scope, with more than 62% of
    direct business in accident-and-health lines.

--  The company has an extremely strong liquidity ratio of 394%. The
    company's (NAIC:68373) ultimate parent is American General Corp.

    (counterparty credit rating double-'A'-minus), the lead company of the large and diversified American General group of financial services companies. However, the rating does not include additional credit for implied group support.
    Ratings 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. Ratings with a 'pi' subscript 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.