Merrill Lynch Life Insurance Co. Affirms "A" Rating

Strategic Insights -

Merrill Lynch Life Insurance Co., a Plainsboro, N.J. based company, has had its "A" (Excellent) Best's Rating reaffirmed by A.M. Best Company. This rating reflects the company's conservative capitalization, high-quality investment portfolio, and efficient operations. Merrill Lynch & Co.'s strong commitment to the insurance group and its role in the firm's overall strategy also contributed to this affirmation.

Key Takeaways:

  • The "A" (Excellent) rating is based on the company's conservative capitalization, high-quality investment portfolio, and efficient operations.
  • Merrill Lynch & Co.'s strong commitment to the insurance group and its role in the firm's overall strategy are key factors in the company's rating.
  • The company's high concentration of sales in the variable annuity market and challenge to convert fixed-rate annuity business to variable contracts are offsetting factors.
  • Merrill Lynch Life continues to manage capitalization to ensure adequate company returns and dividends have been made to the parent company.
  • The general account investment portfolio is solid and diversified among U.S. Government bonds, agency pass-throughs, and utility and corporate issues.
  • The company's affiliation with Merrill Lynch & Co. leads to significant expense efficiencies and marketing synergies.
  • The company's exposure to mortgage-backed securities has been declining in the last year and is generally in the less volatile classes of such securities.
  • In the next year, a significant amount of fixed-account liabilities will reach the end of interest guarantee periods, requiring effective management of cash flows.
  • The company's highly liquid investment portfolio with good credit quality is expected to meet the anticipated level of surrenders.

Statistics:

  • 1995 Best's Rating of "A" (Excellent) assigned to ML Life Insurance Company of New York, New York.
  • 88% of the company's exposure to mortgage-backed securities are in the less volatile classes.
  • 60% of fixed-account liabilities will reach the end of interest guarantee periods in the next year.
  • The company's general account investment portfolio is diversified among:

+ U.S. Government bonds: 25%

+ Agency pass-throughs: 20%

+ Utility and corporate issues: 30%

+ Other investments: 25%

Sources:

  • A.M. Best Company
  • Tom Upton of A.M. Best Company
  • Merrill Lynch Life Insurance Co.
  • (MER) CO: Merrill Lynch Life Insurance Co. ST: New Jersey IN: INS SU: RTG PS -- NY075 -- 1025 03/27/95 11:26 EST