TEXT - Fitch publishes goodwill report for life insurers

(The following statement was released by the rating agency)
Link to Fitch Ratings' Report: Life Insurance Industry (U.S.) -- Is Goodwill
Good?
here

Feb 6 - Fitch Ratings has published a special report examining goodwill and the
potential for impairments in the North American life insurance sector. While
Fitch believes goodwill impairments are likely in the coming quarters, the
factors leading to these impairments have largely been factored into existing
ratings.

Goodwill impairments reflect that the earnings and cash flow expected at the
time of acquisition will not materialize. Over the past year, a number of life
insurers have taken goodwill impairments due to ongoing challenges associated
with difficult macroeconomic conditions and regulatory uncertainty, which are
negatively affecting industry earnings, sales, and equity valuations.

Fitch views the balance sheet impact of goodwill impairments to be limited due
to our focus on statutory capital, which significantly limits the admissibility
of goodwill. Goodwill impairments do affect financial leverage ratios, which is
a key credit metric. However, Fitch notes that the amount of goodwill on the
industry's GAAP balance sheets, which equates to approximately 15% of aggregate
GAAP shareholders' equity, is relatively modest. To better understand the
potential impact of goodwill impairments to our financial leverage metric, a
simple stress was calculated showing a potential impairment of both 50% and 100%
of goodwill. Results of this stress do not raise red flags for the sector.

Material goodwill impairments could lead to negative rating actions in certain
situations, especially when unexpected. The impairment by itself does not drive
rating downgrades. Key considerations for Fitch are the impairment's cause and
effect on financial flexibility and how anticipated future cash flows and
interest coverage are altered.

Fitch's special report, 'Life Insurance Industry - Is Goodwill Good?' is
available at 'www.fitchratings.com'.

(Caryn Trokie, New York Ratings Unit)