CEO Statement Regarding State of Financial Markets
José S. Suquet
Chairman, President and CEO
The past 18 months the financial markets in the United States, and now the world, have been in turmoil as a result of the housing and mortgage crisis.
As we assess the residual impact these issues may yet have on the global economy, I want to assure you that Pan-American Life is well insulated from the specific circumstances that led to the troubles affecting these companies.
From our perspective, these conditions have arisen in large part because of investments made in subprime mortgages at the time of an overheated housing market. Fortunately, we have had no exposure whatsoever to Subprime Mortgages, Alt-A Mortgage Loans, Credit Default Swaps, Collateralized Debt Obligations or Collateralized Loan Obligations, securities that have all been under considerable distress. Consequently, we experienced no losses or any impairment or valuation issues with regard to these types of troubled securities.
The financial impact to Pan-American Life of the turmoil in financial markets since early 2007, the total net after-tax realized losses taken by PALIC since December 31, 2006 until today have only been equivalent to 1.9% of equity as computed following Generally Accepted Accounting Principles (GAAP). Another measure of interest is that the market value of all of our securities as of August 31, 2008 was 97.6% of book value.
Fitch reported on Pan-American Life's financials on July 11, 2008 which gave the Company an "A" rating. Click here to read highlights from the Fitch Ratings report.
At Pan-American Life we remain focused on our core insurance business, which has allowed us to maintain a strong financial footing, even in these uncertain times. We will continue to be vigilant of market trends and practice sound asset management in order to safeguard the financial interests of our policyholders. You can also be confident that Pan-American Life is taking the proper steps so that when the country and the world emerge from the current financial crisis we are in a position to capitalize on the opportunities that lie ahead.