WEISS RATINGSLife And Health Insurance Industry's Capital
Continues To Grow In Second Quarter
|But Some Individual Companies Suffer Sharp Capital Declines|
PALM BEACH GARDENS, Fla., November 17, 1997 -- Capital and surplus of the nation's life and health insurers grew a healthy 12.6% in the second quarter 1997 -- from $156.1 billion at June 30, 1996 to $175.7 billion at June 30, 1997 -- according to Weiss Ratings, Inc. a leading provider of insurance industry ratings and analyses.
Some individual insurers suffered sharp capital declines, however, due to operating losses, large dividend payouts during the period, or other factors. As a result, Weiss issued 45 rating downgrades. Nearly all downgraded companies experienced some level of decline in capital, with 23 insurers reporting capital declines of 25% or more during the first six months of 1997. Fifteen companies received upgrades from Weiss based on their second quarter results.
Noteworthy Upgrades and Downgrades
Among the 1,183 company ratings reviewed by Weiss, notable downgrades include:• Chubb Life Ins Co of America downgraded from A- to B+
The notable upgrades include:• Integon Life Ins Corp upgraded from D+ to C-
"Such a dramatic drop in capital for many companies may be the first warning of a new cyclical decline," commented Martin Weiss, chairman of Weiss Ratings, Inc. "For now, however, the capital declines are limited primarily to the companies we downgraded. In the aggregate, the industry is still showing capital improvement."
Core operating profits, up 5.1% for the first six months of 1997 following a 6% decline during the first quarter, were given a boost by profits in companies' investment portfolios. The industry realized $1.4 billion in capital gains during the first six months of 1997, roughly equal to the same period last year.
After remaining flat during the first quarter, premium volume grew 4.2% for the six months, and annuity deposits continued their double-digit growth for the period, up 16.1% over 1996 levels.
Asset Quality Continues to Improve
Holdings of repossessed real estate declined nearly 19% from second-quarter 1996 levels. They now represent only 4.1% of capital and surplus, compared to 11% in 1992.
Weiss' ratings are based on an analysis of a company's capital, five-year historical profitability, quality of investments, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies, and risk diversification.
Weiss issues safety ratings on over 16,000 financial institutions, including HMOs, life and health insurers, Blue Cross/Blue Shield plans, property and casualty insurers, banks and brokers. Weiss Ratings is the only major rating agency that receives no compensation from the companies it rates. Revenues are derived strictly from sales of its products to consumers and businesses.
Consumers who need more information on the financial safety of a specific company may purchase a rating or analysis directly from Weiss for as little as $15 by calling 1-800-289-9222. Weiss Safety Ratings are also available at many local libraries or through insurance agents.
Note: Net profits from core operations is the net gain from operations before dividends to policyholders and federal income taxes.
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