Talks Regarding Sale Of Skandia's U.S. Unit Reported

A company spokeswoman in Shelton declined to comment.

While refusing to comment on the rumors, Mark Rouck, an analyst with Fitch Rating Service, Chicago, notes that like a lot of companies heavily reliant on income from variable annuities, American Skandia is under balance sheet pressure due to equity market declines.

Robert Hasner, an analyst with Standard and Poors insurance ratings unit in New York, notes that his company recently put the entire U.S. life insurance sector on negative outlook. That action was largely due to the effects of a shaky equity market on insurers fee income.

“American Skandias exposure to some of those risks is perhaps more meaningful than a company with a diversified business profile,” Hasner observes.

Moodys Investment Services London office recently downgraded the credit rating of Skandia Insurance to reflect generally deteriorating conditions for fee-based asset accumulation products.

In June, American Skandia said it was curtailing its variable life insurance and qualified plan divisions in order to focus on its largest and most profitable variable annuity and mutual fund market segments.

In March, the company announced salary and staff reductions due to falling sales.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 16, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.