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AA (Very Strong)
Rationale
The insurer financial strength ratings on Pacific Life Insurance Co. (Pacific Life) and its core subsidiary, Pacific Life & Annuity Co. (Pacific Life & Annuity), reflect their sustained strength in the individual life and individual annuity marketplaces in the U.S. and very good competitive position in institutional products business. In addition, the company has very strong capitalization backed by very strong operating earnings and liquidity. These factors are partially offset by some inherent earnings volatility in times of volatile equity markets, as well as moderate tolerance for credit risk.
Outlook
Standard & Poor’s Ratings Services expects Pacific Life to generate strong revenue and earnings growth in its primary insurance businesses in 2004 and 2005 while maintaining very strong capital strength. More specifically, Pacific Life’s core U.S. individual life insurance business is expected to generate total new life insurance premium of about $1 billion in 2004, representing robust double-digit premium growth. Growth of 5%-10% is expected in 2005. Pacific Life’s individual annuity business is expected to produce 5%-10% premium growth in 2004, with continued single digit growth in 2005. This revenue growth will be complemented by favorable earnings growth in all major product divisions. Pretax GAAP operating (excluding gains/losses) earnings of at least $525 million is anticipated for full year 2004, compared with about $350 million the prior year. Standard & Poor’s does not anticipate any material asset allocation changes in Pacific Life’s investment portfolio, and liquidity is expected to remain very strong. Pacific Life is expected to maintain a Standard & Poor’s capital adequacy ratio of 180% or more.
For more information, visit Standard & Poor's Web site.
These ratings do not apply to the safety or performance of any separate accounts or mutual funds.
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