(The following statement was released by the rating agency)
, August 28 (Fitch) Fitch Ratings today released a
Special Report that
details its examination of U.S. and Canadian life companies'
debt-servicing capacity and maturity distribution of outstanding
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 2011 to June 30, 2014. The
regulatory filing data from 18 publicly traded life insurers in
The North American life insurance industry continues to maintain
strength and improved debt-servicing capacity. U.S. life
earnings showed modest improvement thus far in 2013, and
operating-based coverage metrics improved. Continued run-up in
valuations, if sustained, and an uptick in interest rates would
drivers of further improvements in coverage. Longer term, Fitch
insurers face an uphill battle in materially improving operating
interest coverage metrics due to a continuation of historically
rates and uncertainty tied to a weak economic recovery.
In aggregate, financial leverage for Fitch's publicly traded
universe declined in the first half of 2014 and is now at its
lowest level in
five years. This was driven by an increase in shareholders'
unrealized investment gains and losses) as well as a reduction
debt. Fitch notes that financial leverage for some companies was
elevated at year-end 2013, reflecting prefunding of near-term
Fitch believes the industry faces minimal near-term refinancing
risk, since only
a modest portion of outstanding borrowings mature during in the
2014 and 2015. During the first six months of 2014, USD1.55
billion of debt and
preferred securities were issued in the U.S. and CAD1.15 billion
Issuance in Canada in the first half of 2014 was comparable with
the same period
in 2013. However, in the U.S., issuance was down from USD3.6
billion for the
same period in 2013. In the U.S., all of the issuance was senior
In Canada, the split was 65% subordinated debt and 35% perpetual
The report 'Life Insurers' Financial Leverage and Debt Servicing
Aug. 27, 2014, is available at 'www.fitchratings.com' under
'Special Reports' or by clicking on the link above.
Tana M. Higman
Fitch Ratings, Inc.
70 West Madison St.
Chicago, IL 60602
Douglas L. Meyer, CFA
Douglas R. Baker
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
Insurance Rating Methodology (November 2013).
Applicable Criteria and Related Research: North American Life
Financial Leverage and Debt-Servicing Capacity
Insurance Rating Methodology