NU Online News Service, Jan. 8, 5:01 p.m. – Allmerica Financial Corp., Worcester, Mass., says it is taking four major steps to increase the statutory capital levels at its life insurance companies.
The company today announced an agreement to sell its fixed universal life business to a unit of John Hancock Financial Services Inc., Boston. The move will increase Allmerica’s statutory capital by $106 million.
The company is also refinancing long-term funding agreements, reinsuring variable-annuity death benefit guarantees, and rearranging the ownership structure of its life insurance subsidiaries.
The moves should increase the value of the life companies’ statutory capital to $475 million, up 46% from Sept. 30, 2002, Allmerica says.
The moves have increased the risk-based capital ratio of the lead life company, Allmerica Financial Life Insurance and Annuity Company, to 235%, from 133% at the end of the third quarter, in part by reducing the company’s exposure to fluctuations in stock prices, Allmerica adds.
In Massachusetts, regulators must begin taking action when a life insurer’s risk-based capital ratio falls below 125%.
In related news, Allmerica reports that it has hired an executive search firm to help it find a new chief executive officer. The old CEO, John O’Brien, resigned in late 2002.