Ma status Codes: D=State of domicile L=Licensed R=Licensed for Reinsurance A
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- Vulnerable Best’s Ratings
- Agri General Insurance Company (A.M. Best : 01935 NAIC : 42757) Rating Rationale
- American Commerce Insurance Company (A.M. Best : 02065 NAIC : 19941)
- Atlantic Casualty Insurance Company (A.M. Best : 01780 NAIC : 42846) Rating Rationale
- Atlantic Mutual Insurance Company (A.M. Best : 02063 NAIC : 19895) Centennial Insurance Company (A.M. Best : 02064 NAIC : 19909)
- AXA Corporate Solutions Insurance Co (A.M. Best : 03718 NAIC : 33022) Under Review Rationale
- Converium Insurance (North America) Inc (A.M. Best : 00554 NAIC : 22730) Converium Reinsurance (NA) Inc (A.M. Best : 02696 NAIC : 39136)
- Coregis Insurance Company (A.M. Best : 01890 NAIC : 21318) Rating Rationale
- CPA Mutual Insurance Co of America RRG (A.M. Best : 11319 NAIC : 10164) Rating Rationale
- Doctors Company An Interinsurance Exch (A.M. Best : 03686 NAIC : 34495) Professional Underwriters Liab Ins Co (A.M. Best : 10763 NAIC : 34487)
| Best Rating Updates
Property/Casualty—Janurary—April 2004 MA Status Codes: D=State of domicile L=Licensed R=Licensed for Reinsurance A=Approved for Reinsurance O=Reinsurance (Other) S=Surplus Lines Writer F=Authorized under the Risk Retention Act Rating Action codes: (+) or (-) Rating upgraded or downgraded (New) Assigned initial rating (U) Rating placed under review (*) Rating was downgraded to E from C– on March 22. Current rating effective 3/25. Secure Best’s Ratings A++ and A+ = Superior A and A- = Excellent B++ and B+ = Very Good Vulnerable Best’s Ratings B and B- = Fair C++ and C+ = Marginal C and C- = Week D = Poor E + Under Regulatory Supervision F= In Liquidation S= Rating Suspended
+ Agri General Insurance Company 01935 A 5/24/04 A- L Alliance Assurance Co. Of America 12466 NR-3 5/10/04 B++ L + American Commerce Insurance Co. 02065 A+ 6/21/04 A L + Atlantic Casualty Insurance Company 01780 B 5/17/04 B- S - Atlantic Mutual Insurance Company 02063 B+ 7/6/04 B++ L U AXA Corporate Solutions Ins. Co. 03718 A-u 6/28/04 A- L Casualty Reciprocal Exchange 02141 NR-5 6/21/04 E L - Centennial Insurance Company 02064 B+ 7/6/04 B++ L - Converium Insurance (No. Amer) Inc 00554 A-u 7/26/04 A L - Converium Reinsurance (NA) Inc 02696 A-u 7/26/04 A R - Coregis Insurance Company 01890 B+ 6/21/04 A- L - CPA Mutual Ins. Co. of Amer. RRG 11319 B+ 7/6/04 B++ F - Doctors Company An Interisnurance Exch 03686 B++ 5/17/04 A- L U Evergreen National Indemnity Co 11556 A-u 5/10/04 A- L Rating Current Eff. Prior MA Action Company AMB# Rating Date Rating Status Fairmont Insurance Company 04293 NR-5 5/24/04 B+u L Groveland Mutual Insurance Company 11701 NR-3 5-31-04 NR-1 D Guarantee Insurance Company 02300 NR-2 6/28/04 NR-3 L - Gulf Insurance Company 02451 A- 7/6/04 Au L - Gulf Underwriters Ins. Company 11208 A- 7/6/04 Au S - FFG Insurance Company 11110 A- 5/17/04 A L U Florists Mutual Insurance Company 03142 A-u 6/14/04 A- L Legion Indemnity Company 11860 NR-5 5/3/04 F S Legion Insurance Company 02352 NR-5 5/3/04 F L + Mt. Hawley Insurance Company 02591 A+ 6/7/04 A S Massachusetts Title Ins. Co. 11840 NR-3 6/28/04 A- D - Medical Liability Mutual Ins. Co. 03667 B- 7/6/04 B L - Medical Protective Company 00591 A- 6/21/04 A L + National Interstate Insurance Co. 10829 A 6/28/04 A- L Nationwide Affinity Ins. Co of Amer. 11802 NR-3 7/19/04 A+ L NIPPONKOA Ins Co of America 01909 A- 5/31/04 A L + Occidental F&C Co. of NC 02312 B++ 5/24/04 B+ L + Old Republic National Title Ins. Co. 11924 A+ 5/17/04 A L - Platte River Insurance Company 12488 A 5/3/04 A+ L - Preferred Professional Insurance Co 03699 B++ 5/3/04 A- L Professional Liability Ins Co of America 11411 NR-5 6/28/04 B L - Professional Underwriters Liab Ins Co 10763 B++ 5/17/04 A- S - Providence Washington Ins. Co of NY 03784 B-u 6/7/04 B+u L - Providence Washington Ins. Co. 02411 B-u 6/7/04 B+u L - Providence Washington Ins. Cos 00786 B-u 6/7/04 B+u L Rampart Insurance Company 02649 NR-3 7/6/04 RN-5 L Ranger Insurance Company 03118 NR-5 5/24/04 B++u L + RLI Insurance Company 04210 A+ 6/7/04 A L TIG Premier Insurance Company 02504 NR-5 5/24/04 B++u L Travelers Ins. Co. (Acc Dept) 02521 NR-5 5/3/04 A++ L - Ulico Casualty Company 02623 B- 6/14/04 B L - Ulico Indemnity Company 11329 B- 6/14-04 B S USAgencies Direct Insurance Co 00226 NR-1 6/14-04 NR-2 L Villanova Insurance Company 12110 NR-5 5/3/04 F L Vintage Insurance Company 11672 NR-3 6/28/04 A L - York Insurance Company 02409 B-u 6/7/04 B+u L Agri General Insurance Company (A.M. Best #: 01935 NAIC #: 42757) Rating Rationale: The rating reflects the company's solid capitalization, historically strong operating earnings and leading niche market position within the multiple peril crop insurance (MPCI) field. The rating also recognizes the additional financial support and balance sheet protection provided via aggregate stop loss reinsurance, as well as its long standing expertise within the highly specialized MPCI marketplace. Partially offsetting these positive rating factors is the company's reliance on reinsurance, particularly through ACE American, an affiliate of ACE Property and Casualty Insurance Company, as the holder of the Standard Reinsurance Agreement (SRA), and the business risk associated with an increasingly complex federal program. The majority of Agri General's reinsurance protection is provided by ACE American and the Federal Crop Insurance Corp. (FCIC). Somewhat mitigating this reinsurance dependence is the high credit quality of its reinsurers. A.M. Best views the rating outlook as stable due to the company's strong operating history and solid capitalization. Agri General specializes in writing crop related coverages including the federal multiple peril crop insurance program. The company is owned by Rain and Hail Insurance Service, Inc., an insurance holding company that is partially owned by ACE USA Group. Agri General owns Rain and Hail L.L.C., one of the country's largest managing general agents that services the crop insurance industry. American Commerce Insurance Company (A.M. Best #: 02065 NAIC #: 19941) The following text is derived from the report of The Commerce Group, Inc. Rating Rationale: The rating reflects the group's strong capitalization and historically excellent operating performance derived from Commerce's strict underwriting guidelines and strong agency relations. Partially offsetting these positive factors are the group's geographic concentration and limited product scope, as business is conducted predominantly in Massachusetts and heavily focused on personal automobile. A.M. Best views the rating outlook as stable due to the group's strong capital position and consistent capital generation through operating earnings. As the leading writer of personal lines business in Massachusetts, Commerce benefits from its brand name recognition, extensive underwriting database, and in-depth understanding of the marketplace. In addition, Commerce West and American Commerce provide the group with diversification, reinforcing its strategy to grow and expand outside of Massachusetts. Concurrently, Commerce has enhanced its affiliation with AAA members, who traditionally provide good business persistency and demonstrate favorable loss characteristics. The rating also recognizes the group's financial flexibility afforded by its publicly-traded holding company, The Commerce Group, Inc. The group's geographic and business concentration has resulted in susceptibility to weather related losses and exposure to the highly regulated Massachusetts personal auto market, which has been characterized by aggressive discount programs and mandated rates by the Division of Insurance (DOI). Although, due to the constraints placed on profitability by the overall reduction in rates by mandates, the group, as did many other insurers, discontinued offering filed safe driver private passenger auto rate deviations and reduced discounts afforded to qualifying groups. In addition, as a result of the debt offering, financial leverage has increased significantly and fixed charge coverage has declined. A.M. Best believes continued strong earnings will be necessary for debt service and to maintain fixed charge coverage that is within the acceptable range for the current ratings. The rating applies to the four inter-company pooling members led by The Commerce Insurance Company (Commerce), and affiliates Citation Insurance Company (Citation), American Commerce Insurance Company (ACIC) and Commerce West Insurance Company (CWIC). Atlantic Casualty Insurance Company (A.M. Best #: 01780 NAIC #: 42846) Rating Rationale: The rating reflects the company's improved level of capitalization and operating performance, and sound liquidity. Partially offsetting these positive factors is credit risk related to a substantial reinsurance recoverable, the rise in underwriting leverage prior to 2003, and the relatively new operating strategy and the risk in achieving specific targets. However, given the improvement in capitalization through strong reported profitability and capital contributions, the rating outlook is viewed as stable. Maintenance of the stable outlook is contingent upon the company meeting its projections, as well as reporting conservative loss reserves which will result in continued improvements in operating earnings and capitalization. The positive rating factors are derived from company's efforts to improve operating performance by focusing on its historically profitable core general liability book of business, exiting unprofitable books of business and troublesome states, implementing stricter underwriting guidelines, increasing rates and improving efficiency through investments in technology. In addition, in 2004 the company began writing non-standard personal auto in its predominate state of North Carolina to provide capacity to agents. Management feels this will provide additional revenue diversification and income to the company, as all personal and commercial auto liability business is ceded to the North Carolina Reinsurance Facility (NCRF) in exchange for being a servicing carrier and receiving a ceding allowance. The rating also recognizes the support derived from its parent, which contributed $6 million in capital in the second quarter of 2004 and $4 million in 2003. The parent has also established a contributed surplus schedule when select ratios are triggered. for the next five years. Together, these factors have led to the strong improvement in capitalization. The company experienced some fluctuation in operating returns due to increasing its unearned premium and assumed commission from the influx of new business and a decline in both its commercial automobile and property books of business in 2000 and 2001 which led to modest adverse loss reserve development on prior accident years and a slight decline in surplus. As a result, underwriting leverage increased. In addition, the company has experienced modest adverse loss reserve development over the last three years, the majority related to loss adjustment expense reserves on business that is no longer written. The adverse development has amounted to less than 5% of loss reserves and surplus during this period. Lastly, the company has a reinsurance recoverable on its balance sheet from a non-rated carrier that represents a sizeable percentage of surplus. The company is actively seeking a solution to relieve itself of the credit risk exposure and expects to have this completed by the end of 2004.
The following text is derived from the report of The Atlantic Mutual Companies. Rating Rationale: The rating applies to The Atlantic Mutual Companies' three members, led by The Atlantic Mutual Insurance Company. The rating reflects the group's adequate capitalization and the benefits to be derived from management's restructuring, re-underwriting and increased pricing initiatives over the past several years. The rating also takes into consideration the group's sale of its subsidiary, Atlantic Specialty Insurance Company, and the renewal rights to the majority of its commercial and marine insurance business, expense saving initiatives implemented by management, as well as management efforts to replace soft capital with permanent funds and enhance the quality of surplus and earnings. These positive rating factors, however, are offset by the potential for continued adverse prior year development of the group's loss reserves, the significant deterioration in its underwriting and operating profitability in recent years, as well as the uncertainty regarding its future profitability. The group's rating outlook is negative. This outlook is contingent upon a stabilization in prior year reserves, improved profitability in the group's ongoing personal lines operations and evidence of the company's ability to accumulate capital. A.M. Best believes there remains the potential for continued adverse prior year loss reserve development in The Atlantic's sizable commercial lines reserves, which are in run-off. Furthermore, in 2003, adverse loss reserve development was reported in its private passenger auto line. Combined with substantial catastrophe losses, the group ended the year with substantial underwriting losses in its core personal lines operations. In each of the past five years, adverse commercial reserve development has been a key contributor to weak underwriting margins. The evaluation of the group's capitalization also takes into consideration the completed ground-up asbestos and environmental (A&E) studies, which indicated The Atlantic's ultimate A&E liabilities to be lower than Best had originally contemplated.
reinsurance and surplus notes and the potential for continued adverse prior year loss reserve development. With the Atlantic Master Plan package policy at the core of its personal lines strategy, the group is expanding strategically into non-catastrophe-prone geographic areas. Emphasis is being placed on the use of technology to improve processes and services for customers and agents, as well as to enable more efficient, cost effective growth. In addition to increased pricing initiatives in recent years, The Atlantic has re-underwritten its personal lines and reduced its exposures in states with high involuntary market burdens, adverse regulatory environments and high exposure to natural catastrophes. Price firming throughout the property / casualty markets has been highly beneficial in this regard.
replace soft capital with permanent funds and enhance the quality of surplus and earnings. Included among its capital enhancement initiatives are reinsurance commutations, the sale of select commercial and marine business renewal rights, capital gains from the sale of common equities and fixed income securities, and expense reductions. While management commuted a quota share reinsurance treaty in 2003 and an aggregate excess of loss treaty in early 2004, a sizable adverse development cover is expected to remain in effect due to economic reasons. Interest expenses on The Atlantic's remaining funds-held reinsurance agreements, as well as interest expenses on its outstanding surplus notes will continue to lower net investment income. AXA Corporate Solutions Insurance Co (A.M. Best #: 03718 NAIC #: 33022) Under Review Rationale: A.M. Best no longer views AXA Corporate Solutions Insurance Company as a core subsidiary of the AXA Re Group, which, as announced in 2003, is simplifying its corporate organization. AXA Corporate Solutions Insurance Company will therefore no longer benefit from AXA Re's group rating. However, A.M. Best is currently reviewing the company's future role, and commitment and support available to the company, including a guarantee agreement. Rating Rationale: The rating is based on the company's balance sheet strength, which is supported by a guarantee agreement with an AXA affiliate and which reflects the significant decrease in the company's net underwriting leverage. While maintaining its surplus level, the company has reduced its underwriting risk through an extensive reinsurance program. Partially offsetting these positive rating factors are the company's poor historical operating performance and its concentration in volatile lines of business. As the company has recently implemented a new strategy and prospective improvements in operating results are yet to be confirmed, the rating outlook is negative. The company writes specialty lines of business and the U.S. portions of multinational accounts on behalf of affiliated AXA companies. While its business is concentrated in the volatile aviation and space insurance business, it acts primarily in a fronting role, as most business is reinsured to its affiliates through quota share and stop loss agreements. Though it relies heavily on this affiliated reinsurance, it has maintained its surplus level while significantly reducing its net underwriting exposure and leverage. The company also benefits from a claims-paying guarantee from an affiliated AXA company. Though its operating performance has historically been poor and reflects lack of focus and significant restructuring in recent years, A.M. Best expects the company's results to stabilize based on its clearer strategy and reinsurance protection.
The following text is derived from the report of Converium AG. Under Review Rationale: All the ratings of Converium AG in Switzerland and its core subsidiaries and of related debt issues are under review with negative implications following the announcement of further adverse reserve development. A.M. Best aims to resolve the under review status as soon as possible. Rating Rationale: The financial strength rating applies to Converium AG and its core subsidiaries (collectively referred to as Converium). All ratings are under review with negative implications. The under review status of the ratings follows the announcement of further adverse reserve development. A.M. Best has been factoring further adverse reserve development in its ratings for some time, but the effect of this reserve action will cause 2004 results to fall below expectations. The problem is primarily due to US casualty losses related to the underwriting years 1997 to 2001 which will be bolstered by up to US$ 400 million. It will trigger net impairments of up to US$ 289 million of deferred tax assets and US$ 94 million of goodwill, negatively affecting the balance sheet of Converium Reinsurance (North America) Inc. A.M. Best is currently assessing the full impact of this reserve strengthening and discussing with management any plans for raising new capital. A.M. Best aims to resolve the under review situation as soon as possible. In addition A.M. Best is reviewing the core status of Converium Reinsurance (North America) Inc and Converium Insurance (North America) Inc. Coregis Insurance Company (A.M. Best #: 01890 NAIC #: 21318) Rating Rationale: The rating reflects the future strategic importance of Coregis to the commercial insurance operations of the Employers Re Corp (ERC), as well as the explicit financial support provided by ERC through reinsurance. Ownership of Coregis was transferred to GE Global Insurance Holding Corp (GE Global). in 2003 from its former direct parent, FGIC Holdings Inc, which was sold in August 2003. Coregis sold the renewal rights of its public entity business lines to Argonaut Group (San Antonio, TX) in November 2003, placing all remaining liabilities into run off. With minimal new business activity forecast for 2004, the company is in the process of executing a new business plan. Negative rating factors are the company's weakened risk adjusted capitalization precipitated by the recent execution of an intercompany loan from Coregis to its parent, GE Global, and compounded by historically weak underwriting and operating performance despite previous remedial underwriting actions taken under its current management by Employers Reinsurance Corporation (ERC) (Overland Park, KS). Further Coregis's future is uncertain stemming from the new business plan which has yet to be implemented and executed. The rating outlook is stable based on Coregis' relative size and the stop loss protection afforded it through ERC. CPA Mutual Insurance Co of America RRG (A.M. Best #: 11319 NAIC #: 10164) Rating Rationale: This rating reflects the company's adequate capitalization, high policyholder retention and good geographic spread of risk. The rating further acknowledges the benefit to CPA Mutual, from its strong ties to CPAmerica International, one of the largest networks of accounting firms in the United States. Offsetting these positive factors is the company's unfavorable operating results and resulting deterioration in policyholders' surplus due to increased claim severity and payment of policyholder dividends in prior years, increased reinsurance dependence, as well as its product and policyholder concentration of risk. Additionally, there is continued uncertainty regarding loss reserve adequacy and future operating performance. A.M. Best remains guarded of the level of improvement in operating performance in the current year given the low accident year loss ratio posted in 2003 until this business more fully develops. As a result, the rating outlook is negative. CPA Mutual benefits from its relationship with CPAmerica, particularly through geographic and name recognition among its targeted sector of small sized firms. Also, the variety of services provided through its longstanding association with CPAmerica and management's objective of providing low cost coverage for its members has enabled the company to maintain high policyholder retention. The company has continued to adhere to strict underwriting guidelines and risk management initiatives, non-renewed insureds with unfavorable underwriting results, and increased its rate structure including the elimination of several credits in an effort to improve operating performance. Results have been enhanced by the generation of increased ceding commissions. Doctors Company An Interinsurance Exch (A.M. Best #: 03686 NAIC #: 34495) Professional Underwriters Liab Ins Co (A.M. Best #: 10763 NAIC #: 34487) The following text is derived from the report of Doctors Company Insurance Group. Rating Rationale: The rating reflects the Doctors Company Insurance Group's supportive risk-adjusted capitalization, actions taken by management to restore operating profitability and its strong operating cash flow. These positive factors are offset by the group's unfavorable operating results driven by the continued strengthening of prior years' loss reserves, the resulting reduction in risk-adjusted capitalization, as well as A.M. Best's ongoing concerns regarding the adequacy of loss reserves. Absent restored operating profitability and continued growth in policyholders' surplus, there could likely be further rating action and as a result, A.M. Best views the rating outlook as negative. The group's unfavorable operating profitability is due primarily to significant adverse loss reserve development, aggressive premium growth in prior years and lower net investment income. These factors have been driven by the increase in the severity of claims resulting in disruption in the medical malpractice marketplace with the exit of various insurers offering coverage causing increased demand and rates. The group has taken various actions to restore operating profitability by raising premium rates over the last two years, applying more stringent underwriting criteria and de-emphasizing coverage in unprofitable territories, lines of business and risk classes, as well as improving its claims administration. Furthermore, the group maintains a tier pricing structure, which allows it to better manage risks, an aggressive claims management stance and utilizes various risk management programs, contributing to its strong policyholder retention in its core book of business. In 2003, the group secured a quota-share reinsurance arrangement on its standard and non-standard books of business, issued surplus notes and combined with unrealized capital gains in its equity portfolio, to enhance its capitalization. Specifically, the group received $38.0 million in capital contributions from the issuance of three, 30-year surplus debentures. Also, the group implemented an expense reduction program, which combined with higher ceding commissions due to the quota share reinsurance treaty, contributed to the improved underwriting expense ratio. The rating is based on the consolidated operating performance and financial condition of The Doctors' Company, an Interinsurance Exchange and its wholly owned subsidiaries, Professional Underwriters Liability Insurance Company and Underwriter for the Professions Insurance Company.
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