A.M. Best Affirms Financial Strength Rating of Ohio Casualty Group; Affirms Debt Rating and Assigns Indicative Ratings to Ohio Casualty Corporation.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 8, 2003 A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of the subsidiaries of Ohio Casualty Group (Cincinnati, OH). Concurrently, A.M. Best has affirmed the debt rating of "bbb-" of Ohio Casualty Corporation's (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :OCAS OCAS abbr. Organization of Central American States OCAS n abbr (= Organization of Central American States) → ODECA f OCAS n abbr (= ) (Cincinnati OH) convertible notes issued on March 19, 2002. A.M. Best has also assigned indicative ratings of "bbb-" senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. , "bb+" subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". , "bb" preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. to Ohio Casualty Corporation and "bb" trust preferred securities to Ohio Casualty Capital Trust I and II, which are associated with the $500 million universal shelf registration announced by Ohio Casualty Corporation on May 8, 2003. All ratings have been assigned stable outlooks. The financial strength rating affirmation is based on the Group's supportive capitalization, diversified product offerings and geographic spread of risk, as well as its strong brand name recognition and long-standing relationships with its independent agency distribution force. Also, in an effort to rebound from several years of weak operating performance, the new management team has been proactive in implementing various initiatives, including an aggressive expense containment policy, re-underwriting of all product lines and strengthening underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. guidelines, which has contributed to the Group's restored operating profitability. Furthermore, the parent, Ohio Casualty Corporation, closed a convertible note private offering in March 2002. The proceeds from the sale, which amounted to $201 million, were used to retire the Ohio Casualty Corporation's existing bank debt, which contained several onerous on·er·ous adj. 1. Troublesome or oppressive; burdensome. See Synonyms at burdensome. 2. Law Entailing obligations that exceed advantages. covenants that jeopardized the Group's historically sound balance sheet strength. Offsetting these positive rating factors is the Group's below average return measures and decline in statutory surplus driven by poor underwriting experience. The Group's poor underwriting experience coupled with dividend payments to Ohio Casualty Corporation has led to a marked deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in statutory surplus and rise in underwriting leverage measures over the last five years. Although the Group has reduced its sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. common stock portfolio to roughly 40% of statutory surplus, it remains at a level that is above that of the commercial casualty peer composite. This risk is partially mitigated by the Group's solid overall capitalization and the financial flexibility of its publicly-traded parent. The rating outlook is stable based on the Group's supportive capitalization and measures implemented by management to restore and stabilize overall earnings over the mid-term. The Ohio Casualty Corporation is an insurance holding company that consists of The Ohio Casualty Insurance Company (Ohio) and four operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. . The remaining subsidiaries are as follows: -- West American Insurance Company -- American Fire & Casualty Company -- Ohio Security Insurance Company -- Avomark Insurance Company A.M. Best has assigned a financial strength rating of NR-3 (Rating Procedure Inapplicable in·ap·pli·ca·ble adj. Not applicable: rules inapplicable to day students. in·ap ) to Ohio Casualty of New Jersey Inc (Ohio) due to its current run-off status. The following debt rating has been affirmed: Ohio Casualty Corporation-- -- "bbb-" on $201 million 5.00% senior unsecured convertible notes, due 2022 The following indicative ratings on securities available under shelf registration have been assigned: Ohio Casualty Corporation-- -- "bb" on preferred stock -- "bb+" on subordinated debt -- "bbb-" on senior unsecured debt -- Ohio Casualty Capital Trust I and Trust II-- "bb" preferred securities For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/ratings/debtrating/companies.html. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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