Partially offsetting these strengths are the company's high risk adjusted
leverage and high earnings volatility relative to peers.
pricing is a key advantage to using the system and allows lenders to bid on loans based on their own pre-defined risk parameters.
Ratings further reflect the company's adequate level of capital and coverage metrics, particularly on a risk adjusted
basis and moderate usage of leverage.
The downgrade reflects weakening in PICL's risk adjusted
capitalisation due to deterioration in its financial performance caused partly by reserve strengthening in its commercial small to medium-sized (SME) account in 2006.
Fitch's Stable Outlook is driven by expectations for AEILIC to maintain good risk adjusted
capital, which should be in excess of 350% at year-end 2006, and a high-quality fixed income portfolio.
The downgrade reflects the impact of poor performance, including anticipated performance at year-end February 2006, on the Club's risk adjusted
Fitch believes MFC's strong, risk adjusted
capitalization provides robust support for MFC's policyholder liabilities as well as buoyant growth.
While risk adjusted
capitalization has weakened over the past two years, NNN remains strongly capitalized for the 'BBB-' rating.
The review included an assessment of the recent losses suffered from Hurricanes Katrina and Rita and the strengthening of risk adjusted
capitalization by the issuance of common stock and perpetual non-cumulative preferred stock offerings by Odyssey Re Holdings.
Fitch also views Midland National's operating leverage as elevated and believes that, while current risk adjusted
capital is solid, the ability of statutory capitalization to support strong, sustained growth may be challenged.
This comparison results in a Risk Adjusted
Capital Ratio that is comparable across issuers and property types.
The affirmation of the financial strength ratings reflects Swiss Re America's excellent stand-alone risk adjusted
capitalization and significant market presence supported by a sophisticated senior management team, full service capabilities and exceptional business franchise.