A.M. Best Affirms Rating of OneBeacon's Subsidiaries and Affirms Indicative Shelf Registration Ratings of Fund American Companies, Inc.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--July 31, 2002 A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of the insurance subsidiaries of OneBeacon Insurance Group OneBeacon Insurance Group offers a range of specialty and segmented commercial and personal insurance products sold primarily through select independent agents. As one of the oldest property and casualty insurers in the United States, OneBeacon traces its roots to 1831 and , Boston. A.M. Best also affirmed the indicative shelf registration ratings for Fund American Companies, Inc. These affirmations follow the completion of A.M. Best's annual rating review of the group's balance sheet and operating results. These ratings reflect OneBeacon's excellent capitalization, strong agency franchise and prospective earnings capacity, which is enhanced by the availability of significant 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 the group's asbestos and environmental (A&E) losses as well as other significant mass tort A mass tort is a civil action involving numerous plaintiffs against one or a few corporate defendants in state or federal court. As the name implies a mass tort includes many plaintiffs and law firms have used the mass media to reach possible plaintiffs. liabilities and improved operating fundamentals. Additionally, these ratings recognize the positive implications of OneBeacon's ownership by White Mountains Insurance Group White Mountains Insurance Group is a holding company with business interests in property and casualty insurance, and reinsurance. The group owns the direct marketing insurer Esurance. External links
See: New York Stock Exchange : WTM WTM World Travel Market (London) WTM World Tamil Movement WTM What's the Matter? WTM Windows Task Manager WTM Web, Trattamenti e Materiali (Italian) WTM Winner Takes Most WTM Wind Tunnel Model ), its strengthened management team, as well as the refocused business strategy and improved balance sheet quality. A major step toward fulfillment of this new strategy was accomplished in November 2001 when the group agreed to transfer all of its non-core insurance businesses, including related infrastructure, to Liberty Mutual. Furthermore, OneBeacon's balance sheet was significantly strengthened at the end of 2001 through a sizable reserve addition, which was fully supported by stop-loss reinsurance protection from General Reinsurance Corp. on non-A&E loss reserves. This protection has now been exhausted. In addition, the group's A&E reserves and related remaining exposures have essentially been removed from the balance sheet through a reinsurance contract with National 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 Company. As of year-end 2001, over $700 million of net protection remains in place under this contract. As part of OneBeacon's balance sheet restructuring, it liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. nearly all its unaffiliated common equity holdings before the end of 2001, thus missing the recent bear market that has damaged many of its peer commercial casualty companies. These positive rating factors are offset by OneBeacon's subpar sub·par adj. 1. Not measuring up to traditional standards of performance, value, or production. 2. Below par in a hole, round, or game of golf. historical earnings, stemming largely from loss development on business acquired with its 1998 merger with General Accident. The extraordinary reserving actions taken at the time of the 1998 merger and again in 2000 and 2001--along with restructuring charges and World Trade Center losses in 2001--have served to generate sizable operating losses, which have contributed to a reduction in statutory policyholders' surplus of 36% during the past two years. Moreover, the financial leverage (debt plus 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 total capital) of White Mountains White Mountains, part of the Appalachian system, N N.H. and SW Maine, rising to 6,288 ft (1,917 m) at Mt. Washington in the Presidential Range and to 5,249 ft (1,600 m) at Mt. Lafayette in the Franconia Mountains. Crawford Notch separates these two main groups. is relatively high at 38%. However, management intends to refinance $260 million of the company's debt during the latter half of 2002 with funds raised either through a public offering of White Mountains' common stock or by exercising an option to issue common stock directly to the holder of the debt, thus providing for reduced financial leverage and additional flexibility in the parent's capital structure. A.M. Best believes the series of actions taken by the new management team to minimize prior year loss development, stabilize investment earnings and improve underwriting performance will result in greater earnings potential for OneBeacon. This will enable it to enhance its strong capitalization while managing parental debt obligations. As a result, A.M. Best views OneBeacon's rating outlook as stable. The financial strength rating of A (Excellent) has been affirmed for the following insurance subsidiaries of OneBeacon Insurance Group: - "bbb" on senior debt - "bbb-" on subordinated debt and preferred securities - "bb+" on preferred stock The following indicative shelf registration ratings have been affirmed: Fund American Companies, Inc.-- - "bbb" on senior debt - "bbb-" on subordinated debt and preferred securities - "bb+" on preferred stock 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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