A.M. Best Affirms Ratings of American Modern Insurance Group; Assigns Indicative Ratings to Shelf Registration.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 25, 2004 A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of American Modern American Modern was a distinct American design aesthetic formed in the period between 1925 and World War II. American Modern was created by a pioneering group of designers, architects and artists, among them were Norman Bel Geddes, Donald Deskey, Henry Dreyfuss, Paul Frankl, Insurance Group (American Modern) and its property/casualty affiliates. A.M. Best has also affirmed the financial strength rating of A- (Excellent) of American Modern Life Insurance Company and Modern Life Insurance Company of Arizona, Inc. (Phoenix, AZ). Concurrently, A.M. Best has assigned indicative ratings of "a-" senior debt, "bbb+" 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". and "bbb" 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 the $150 million shelf registration filed by the parent, The Midland Company (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 : MLAN (Music LAN) A local area network based on FireWire that is used to transport audio, video and MIDI data. As music has evolved into the digital realm, mLAN is designed to replace the myriad of cables, plugs and "in," "out" and "through" sockets on synthesizers, mixers and ). All companies listed above are located in Amelia, OH, except where specified. The outlook on all ratings is stable. The ratings reflect American Modern's superior capitalization, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating profitability and niche strategy in providing insurance products for manufactured housing Manufactured housing (also known as prefab housing) is a type of housing unit that is largely assembled in factories and then transported to sites of use. In the United States, the term "manufactured home" specifically refers to a house built entirely in a protected , as well as motor sport products. The group's disciplined 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. and focused operating strategies have resulted in strong five-year pre-tax returns on revenue and equity. In addition, American Modern benefits from its short-tail property focus and low volatility in loss reserves. With approximately 50% of its premium writings in the manufactured housing segment, the group is exposed to catastrophe losses. However, strict adherence to underwriting guidelines, improvements in the quality of pre-fabricated homes and the group's broad geographic spread has reduced the potential exposure to these severe shock losses. The ratings also acknowledge the modest financial leverage of the parent with total debt to adjusted capitalization of 27% and fixed coverage ratio of approximately 8 times. Modestly offsetting these positives are American Modern's elevated premium leverage and above average expense levels in relation to the property lines industry composite. Expenses are driven by its competitive commission structure, particularly in terms of contingency-based payments. Elevated premium leverage is a result of increased claim frequency, modest exposure growth and dividends to the parent. The affirmation of the life companies' rating is based on their strategic position within American Modern and its financial support for the life companies, a positive operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before trend, a high credit quality investment portfolio and favorable risk-adjusted capitalization. Partially offsetting factors include the impact of economic and regulatory challenges on the future growth of the credit insurance business, a narrow product profile and geographic concentration risk with respect to premium production. The financial strength rating of A+ (Superior) has been affirmed for American Modern Insurance Group and its following subsidiaries: -- American Modern Home Insurance Company -- American Family American Family is a photographic artwork exhibition by Renée Cox. See also
-- American Southern Home Insurance Company -- American Western Home Insurance Company -- G.U.I.C. Insurance Company -- American Modern Lloyds Insurance Company The financial strength rating of A- (Excellent) has been affirmed for the following life subsidiaries of The Midland Company: -- American Modern Life Insurance Company -- Modern Life Insurance Company of Arizona, Inc. The following indicative debt ratings have been assigned under the $150 million shelf registration: The Midland Company-- -- "a-" on senior unsecured -- "bbb+" on subordinated -- "bbb" on preferred stock For a list of A.M. Best's debt ratings, please visit http://www3.ambest.com/debtratings/. 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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