A.M. Best Affirms Acceptance Insurance Ratings, Assigns a Negative Outlook.OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 26, 1999--A.M. Best Co. today affirmed the A- (Excellent) ratings of the pooled insurance subsidiaries of Acceptance Insurance Cos., Inc. following the company's Feb. 24 announcement of restructuring plans. The pool companies have been assigned a negative rating outlook. The restructuring will result in the elimination of specific unprofitable books of general agents and program business, as well as the personal auto lines segment, which will reduce gross written premiums by about 21%. As part of the restructuring, Acceptance has strengthened its loss and LAE reserves and is exploring the sale of certain discontinued business. Today's action followed extensive discussions with the company regarding the restructuring and the reserve charge, as well as a review of the group's 1999 business plan. The affirmation reflects A.M. Best's confirmation that Acceptance's $27 million loss-reserve strengthening charge primarily affected the discontinued programs and did not deplete de·plete v. 1. To use up something, such as a nutrient. 2. To empty something out, as the body of electrolytes. the group's surplus, due to the solid underwriting results of its profitable continuing lines. Further, Acceptance's future exposure to adverse reserve development is mitigated by management's adoption of a more conservative reserving philosophy and the securing of additional excess reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. protection on both the discontinued and continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . Although 1999 premium volume and interim underwriting cash flows will be hurt by the restructuring, the emphasis on historically profitable core books of business - including specialty crop and property business - has positive implications for the group's future earnings prospects, as it sheds the more commodity-oriented segments of the business. The outlook on the Acceptance ratings reflects the continued soft pricing conditions of the specialty insurance market and the potential disruption to the continuing operations from the restructuring, as well as the diminished financial flexibility of the parent due to its impaired access to the capital markets following its earnings shortfall announcement and recent languishing lan·guish intr.v. lan·guished, lan·guish·ing, lan·guish·es 1. To be or become weak or feeble; lose strength or vigor. 2. share price. However, this is offset by the company's continued positive operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. position and sound liquidity that is enhanced by a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility with $50 million of available credit. The rating is based on the consolidated financials of the six operating insurance companies owned by Acceptance Insurance Cos., Inc. A group rating is assigned to Acceptance Insurance Co. and Acceptance Indemnity Insurance indemnity insurance Managed care A type of health insurance in which a Pt can choose the hospital and provider, and the insurer reimburses the Pt or provider for a set percentage of the cost, minus deductibles and co-payments Co. of Omaha, Neb.; Phoenix Indemnity Insurance Co. of Phoenix, Ariz.; Redland Insurance Co. of Council Bluffs, Iowa Council Bluffs is the county seat of Pottawattamie County, Iowa, United States[1] and is on the east bank of the Missouri River. As of a 2006 census estimate, the city had a total population of 60,271. ; and Acceptance Casualty Insurance Co. of Lubbock, Texas “Lubbock” redirects here. For other uses, see Lubbock (disambiguation). Lubbock is the 10th-largest city in the state of Texas.[1] Located in the northwestern part of the state—a region known historically as the Llano Estacado , due to an inter-company pooling arrangement between the five affiliates. The sixth company is American Growers Insurance Co., which operates as a specialty crop insurer and constitutes a separate rating unit whose current A- rating is not affected by the restructuring. The pool underwrites specialty property and casualty insurance and targets niche markets and programs throughout the United States. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
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