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Fitch Ratings-Chicago-Jun 17, 2004: Fitch Ratings has placed the 'A' insurer financial
strength rating of The Lafayette Life Insurance Company (Lafayette) on Rating Watch
– Positive.
The rating action follows today's announcement that the boards of directors of Lafayette
Life MIHC, Inc., Lafayette's ultimate parent, and Western & Southern Mutual
Holding Company (WSMHC) have approved the terms of a merger agreement under which
Lafayette Life MIHC, Inc. would merge into WSMHC. As a result of the merger, Lafayette
is expected to become an affiliate of Western & Southern Financial Group. Fitch
currently has an insurer financial strength rating of 'AA+' on The Western &
Southern Life Insurance Company, WSMHC's primary operating company.
The Rating Watch – Positive status of Lafayette's rating reflects Fitch's expectation
that a positive rating action will be taken as a result of the merger. Historically,
Lafayette's rating has been constrained at least partially by the company's limited
scale, which has presented challenges with regard to distribution, expense levels
and capacity for growth. Western & Southern Financial Group's larger scale and
capital resources clearly have positive implications for Lafayette's financial and
operating profile.
Lafayette's current rating is supported by its conservative liability profile, consistent
profitability, strong capitalization and conservative management team. The company's
focus on traditional life insurance and fixed annuities has served it well in avoiding
some of the equity market-related problems faced by other industry participants
in recent years, and has allowed the company to produce moderate, relatively consistent
operating earnings over the past decade.
Lafayette, which is based in Lafayette, Indiana, was established in 1905 as a mutual
life insurance company. It specializes in life insurance and annuities for individuals
and small to medium-sized businesses, primarily in rural and suburban areas. At
year-end 2003, the company had total admitted assets of $1.60 billion and capital
and surplus of $105 million.
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