Historically growth has been strong, however, in 1999 premium growth declined due to delays in the implementation of a new administrative system resulting in slower service and increased competition in pricing. Going forward, Fitch expects growth to return to previous levels through enhancing service capabilities while re-emphasizing service, flexibility and responsiveness to brokers. CGUA's strategy going forward is to offer these remaining products through the existing distribution channels. Sales growth has been in products with lower profit margins and higher reserve requirements. Premium income and deposits growth over the past five years can be primarily attributed to growth in the structured settlement annuity business.
Profitability remains relatively low for the rating category.
Fitch recognizes that these return levels are somewhat suppressed by the company's high level of under-utilized capital and expects these return measures to improve as capital is profitably deployed. 1995 BOP Adj. The company's surplus position has strengthened through substantial capital contributions from the company's former parental organization and modest earnings growth. Future surplus is expected to increase through business expansion, which will result in increased retained earnings. CGUL's operating leverage of 11.2x at yearend 1999, increasing from 10.9x in 1998 is conservative for the book of business.