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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 28, 2003 12:00 AM (EST)
A.M. Best Co. has downgraded the group financial strength rating to A (Excellent) from A+ (Superior) of Aviva Life Insurance Company (Wilmington, Delaware) and its subsidiary, Aviva Life Insurance Company of New York (Buffalo, New York ), and has assigned the rating a negative outlook.
This rating action reflects a decline in the company's risk-adjusted capitalization due to realized capital losses in its investment portfolio and a statutory operating loss in 2002. This operating loss is primarily the result of reserve strengthening and new business strain.
In recent years Aviva Life has been increasing its use of reinsurance to manage new business strain. While overall levels of capital have increased during this time, they have not kept pace with the increase in actuarial liabilities, leading to a decline in risk adjusted capitalization.
During 2002, reserve strengthening and a significant increase in new business production led to an operating loss. Realized capital losses during the year also adversely impacted risk adjusted capitalization. A.M. Best believes that Aviva Life will be challenged to continue its significant organic growth.
Somewhat mitigating these rating concerns are the company's diversified annuity liability Profile, investment grade bond portfolio and fixed income expertise.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.