Fitch Ratings Affirms CGU Life Insurance Ratings

Fitch Ratings Affirms CGU Life Insurance Ratings

Business Editors

CHICAGO–(BUSINESS WIRE)–March 1, 2002

Fitch Ratings affirms the ‘AA-‘ insurer financial strength ratings of CGU’s U.S. life insurance companies, CGU Life Insurance Company of America (CGUA), and its wholly owned subsidiary CGU Life Insurance Company of New York (CGUNY). The Rating Outlook is Stable.

The affirmation recognizes the support (explicit and implicit) and strength of their ultimate parent CGNU plc. (CGNU). The ratings reflect a conservative approach to investing, strong capitalization and sound asset/liability management. Offsetting factors include modest-though-improving revenues and profitability, relatively high interest-rate risk and that the company will be challenged to significantly improve operating performance given its lack of a dominant position in any one market and the highly competitive nature of its core markets.

CGNU is currently, the largest insurance group in the UK (based on aggregate premiums) with global strategies to increase assets under management, grow earnings from life and savings, and expand in the U.S. market. CGUA is immaterial to its parental organization as a whole, however it provides CGNU with a foothold into the U.S. life insurance market, which supports CGNU’s global strategy. As a result, CGNU has provided both implicit and explicit support to CGUA. However, Fitch believes the U.S. market has been de-emphasized in the near term and the sooner CGNU exploits its opportunities available in the U.S. the more likely CGUA will remain strategic to its parent.

Entity/Issue/Type Action Rating/Outlook

CGU Life Insurance Co. of America

–Insurer financial strength Affirmed ‘AA-‘/Stable.

CGU Life Insurance Co. of NY

–Insurer financial strength Affirmed ‘AA-‘/Stable.

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