Here is why they have to "pay" in order to sell PILIC:
S&P Affirms Provident Indemnity Life Ins 'Bpi' Rtg
NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire-- Sept. 23, 1999--Standard & Poor's today affirmed its single-'Bpi' insurer financial strength rating on Provident Indemnity Life Insurance Co.
Provident Indemnity Life Insurance is a stock company based in Norristown, Pa. and is licensed in 25 states, D.C., and the U.S. Virgin Islands. Its major lines of business are group accident and health and individual life, including military life business. The company is under the control of Provident Indemnity Corp., a Pennsylvania-based financial holding company, which, in May 1999, announced its plans to merge with its majority-owned subsidiary, HealthAxis.com Inc., an Internet-based health insurance marketer.
The sale of Provident Indemnity Life Insurance is currently being pursued by management. The company, which represents itself primarily by brokers, commenced operations in 1904. Florida, Georgia, Pennsylvania, Louisiana, and Texas constitute 74% of its business.
Major Rating Factors:
-- Capitalization is weak, as indicated by Standard & Poor's capital adequacy ratio of under 50%.
-- The company is rated based on stand-alone characteristics.
-- Profitability is poor. Time-weighted return on assets is negative 5.8%, and the Standard & Poor's earnings adequacy ratio is negative 48.8%.
-- The company's volatile earnings, in conjunction with a low two-year average ratio of cash inflows to cash outflows (87%) and current capital levels of just $5.3 million, are limiting factors.
-- The company has an aggressive investment profile with respect to risk assets as a percent of capital (95.9%). The largest class of risk assets is $4.8 million in real estate occupied, which accounts for 91.2% of capital.
'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
CONTACT:
Alan Koerber, New York (1) 212-438-7211
Copyright 1999, Standard & Poor's Ratings Services |
