Fitch Releases Report on North American Life Insurers' Financial Leverage & Debt-Servicing Capacity

CHICAGO--()--Link to Fitch Ratings' Report: North American Life Insurers' Financial Leverage and Debt-Servicing Capacity

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=742625

Fitch Ratings today released a Special Report that details its examination of U.S. and Canadian life companies' financial leverage, debt-servicing capacity and maturity distribution of outstanding debt.

In this report, Fitch analyzes key holding company credit metrics of publicly traded life insurance organizations, examining changes in financial leverage and debt-servicing capacity from year-end 2010 to year-end 2013. The report compiles regulatory filing data from 18 publicly traded life insurers in Fitch's debt rating universe.

The North American life insurance industry continues to maintain balance sheet strength and reasonable debt-servicing capacity. U.S. life insurers' operating earnings showed improvement in 2013, and correspondingly, GAAP operating-based coverage metrics improved. The recent run-up in interest rates and equity market valuations, if sustained in 2014, would be primary drivers of further improvements in coverage.

In aggregate, financial leverage for Fitch's publicly traded life insurance universe decreased modestly in 2013. Increased debt issuance was more than offset by an increase in shareholders' equity (excluding unrealized investment gains and losses).

Fitch believes the industry faces minimal near-term refinancing risk since only a modest portion of outstanding borrowings mature during in 2014 and 2015. Issuance of long-dated and perpetual securities in 2013 was down from the prior year and was primarily to pre-fund upcoming maturities. During 2013, USD9 billion of debt and preferred securities were issued in the U.S. and CAD1.3 billion in Canada.

The report 'Life Insurers' Financial Leverage and Debt Servicing Capacity' dated March 28, 2014, is available at 'www.fitchratings.com' under 'Insurance' and 'Special Reports'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--Insurance Rating Methodology (November 2013).

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723072

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Contacts

Fitch Ratings
Tana M. Higman, +1 312-368-3122
Director
Fitch Ratings, Inc.
70 West Madison St.
Chicago, IL 60602
or
Douglas L. Meyer, CFA, +1 312-368-2061
Managing Director
or
Douglas R. Baker, +1 312-368-3207
Analyst
or
Media Relations:
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Tana M. Higman, +1 312-368-3122
Director
Fitch Ratings, Inc.
70 West Madison St.
Chicago, IL 60602
or
Douglas L. Meyer, CFA, +1 312-368-2061
Managing Director
or
Douglas R. Baker, +1 312-368-3207
Analyst
or
Media Relations:
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com