CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 09, 2003 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating to B++ (Very Good) from A- (Excellent) of Sage Life Assurance of America Inc (Wilmington, DE) and placed the rating under review with negative implications.
This rating action follows Sage Life's reported sharp decline in its statutory capital and surplus position as of December 31, 2002, along with its lack of financial flexibility. Sage Life reported a net loss of $22.3 million for 2002, which was driven primarily by operating losses, provisions for severance costs of $4.8 million and the establishment of non-recurring reserves of $7.7 million earmarked to cover run-off expenses for the next -two decades.
Although the capital position is still strong from a regulatory perspective, A.M. Best has placed the rating under review due to Sage Life's reduced financial cushion to cover any unforeseen adverse developments and lack of financial flexibility. Future costs have been provided for, and future operating results are expected to be at or near a break-even level. However, the rating will remain under review over the next several quarters while A.M. Best monitors Sage Life's run-off results against expectations. A.M. Best will re-evaluate the rating should any material change occur in Sage Life's business profile or financial condition.
The current rating continues to recognize Sage Life's limited operating profile-whereby no new business is accepted-and A.M. Best's expectation that risk-adjusted capitalization will remain at current levels as its block of separate account annuity business runs-off.
The rating also considers Swiss Re Life & Health's role as a minority shareholder and strategic partner. Additionally, Sage Life reinsures mortality risks and other contract guarantees with highly rated reinsurers.
In conclusion, Sage Life's management maintains its belief that Sage Life has adequate capital resources to meet its contract benefit and servicing obligations to existing contract holders.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.