DBRS Rates Empire Life

Well … this is interesting enough to rate its own post, even though Empire Life has no publicly issued preferred shares … although its parent does: ELF.PR.F & ELF.PR.G.

DBRS is assigning:

a Claims Paying Rating of IC-2 to policy obligations issued by The Empire Life Insurance Company (Empire or the Company). DBRS has also assigned an Issuer Rating of “A” and a Subordinated Debt rating of A (low) to Empire. All ratings have a Stable trend.

While capitalization has traditionally been very conservative, the recent deterioration in equity market performance has forced it to raise additional capital in the form of $125 million of subordinated debt issued to E-L Financial Corporation Limited (E-L), which brings the Company’s financial leverage ratios closer to those of its industry peers at around 16%.

The underlying exposure of Canadian life insurance companies to equity markets has become apparent following the recent deterioration in global equity markets. The Company realized that it must reduce its direct holdings in common equities and completed steps to begin this reduction in 2006, recognizing that it is also indirectly exposed to equity markets through segregated fund guarantees and the fees earned on assets under management (AUM). The Company is currently managing its overall equity exposure (ownership of common stock and exposure to segregated fund guarantees) in order to remain consistent with the overall equity exposure level of industry peers. The Company’s asset mix is otherwise more conservative than that of industry peers, with lower exposure to mortgages and real estate and a greater portion of its mix in domestic government bonds.

One can only speculate as to whether we shall see any direct issuance from Empire Life in the future!

One Response to “DBRS Rates Empire Life”

  1. […] Readers with extremely good memories will remember that Empire Life was rated by DBRS in May, at which time I speculated that a new issue might be coming […]

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