as the credit rating agency Standard & Poors (S&P)
is downgrading ratings of several life insurers worldover,
the New York-based New York Life Insurance Company got
its financial strengths affirmed.
comes despite the companys exposure to some of the most
notable problem credits at the beginning of 2002. In the
first six months of 2002, as a result of these credit
issues and the decline in the equity markets, it suffered
realised and unrealised losses of $625 million.
The company has
been able to sustain these losses because of its diversification
and extremely strong capital base, which even after such
losses remained extremely strong as indicated by a risk-based
capital ratio on S&Ps model of approximately 316
A combination of
several positive features extraordinary strong business
position in individual life and annuities, growing track
record of enhancing the productivity of its career agency
force, continued improvement in individual sales, disciplined
approach to asset and liability management and small but
rapidly growing presence in the global markets satisfied
S&P to affirm its double-A-plus counter-party credit
and financial strength ratings on New York Life.
S&P also affirmed
its ratings on life insurers affiliates with stable outlook.
New York Life is one of the most respected names in the
domestic life insurance business, says S&Ps credit
analyst Thomas Upton.
The companys individual
life and annuity sales were up 42 per cent and 6 per cent,
respectively, in 2001 versus 2000, with the former resulting
in about a 7 per cent market share nationally. In 2001,
the company was the number one US life insurer based on
new sales, as reported by Limra.
the positive factors mentioned above are the developing
business position of New York Lifes investment management
subsidiaries and the ongoing process of maintaining and
enhancing the operational efficiencies that have been
gained in recent years.
New York Life reorganised
all its investment management business operations under
a separate subsidiary to integrate all related functions
within its group. S&P believes the insurer has begun
to show cohesion in its strategy for this business, as
demonstrated by total sales in 2001 of $16.4 billion,
roughly 20 per cent above those of the previous year.
Growth in agency
life sales increased by 18 per cent in year 2001. There
has also been substantial growth in individual life and
annuity business now being sold by alternative means,
including distribution through banks, stockbrokers, and
independent agents. Brokerage sales increased 125 per
cent in 2001 and have continued to increase by 58 per
cent for the first half of 2002 compared with the first
half of 2001.
In addition, S&P
believes New York Life has established a good foothold
in several foreign markets, most prominently Mexico, with
its international sales increasing 29 per cent from December
2001 to June 2002 and now account for 25 per cent of all
York Life now projects breakeven for this business in
2002, which is one year ahead of its former schedule.
S&P expects that New York Lifes total individual
life insurance sales will be up over 15 per cent for 2002,
while individual annuity sales will remain flat despite
the volatile equity markets. Any losses in the asset portfolio
through the remainder of 2002 will be modest, reflecting
the overall high quality of that portfolio.