A.M. Best Affirms Ratings of Employers Re Corp Group and Westport Insurance, Downgrades Rating of Medical Protective and Revises Outlook to Stable.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 15, 2004 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength ratings of A (Excellent) of Employers Re Corp Group (Employers Re) and Westport Insurance Corporation (Jefferson City Jefferson City, city (1990 pop. 35,481), state capital and seat of Cole co., central Mo., on the south bank of the Missouri River, near the mouth of the Osage; inc. 1825. , MO). The affiliates comprising the group are Employers 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. Corporation, GE Reinsurance Corporation (Barrington, IL) and First Specialty Insurance Corporation, a reinsured affiliate. All companies listed above are located in Overland Park Overland Park, city (1990 pop. 111,790), Johnson co., NE Kans., a residential suburb of Kansas City; inc. 1960. There is printing and publishing, and the manufacture of apparel, aircraft parts, cement, prepared foods, salt, chemicals, marine accessories, and signs. , KS, except where specified. The outlook for these ratings is stable. Additionally, A.M. Best has downgraded the financial strength rating to A- (Excellent) from A (Excellent) for Medical Protective Company (Fort Wayne Fort Wayne, city (1990 pop. 173,072), seat of Allen co., NE Ind., where the St. Joseph and St. Marys rivers join to form the Maumee River; inc. 1840. It is the second largest city in the state, a major railroad and shipping point, a wholesale and distribution hub, , IN). The rating outlook has been revised to stable from negative. The affirmation of Employers Re's rating reflects its excellent risk-adjusted capitalization, improving operating performance and its dominant market presence and distribution capabilities. With two years of improving 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. results bolstered by asset sales and other capital management improvements, as well as significant third-party aggregate stop loss protection, Employers Re has maintained capital in line with an A (Excellent) rating and has exhibited prospective long-term earnings capability stemming from its well diversified business platform. In addition, over the past two years the company has executed underwriting actions, implemented tighter underwriting controls and has maintained its prominence in the worldwide reinsurance markets through its international distribution capabilities. Nevertheless, Employers Re remains exposed to legacy issues related to its asbestos and environmental exposure, as well as the potential for continued deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of liabilities associated with the 1997 to 2001 accident years. Furthermore, limited flexibility exhibited by the direct parent, GE Global Insurance Holdings Corporation (GE Global) (Overland Park, KS) has placed pressure on the risk-adjusted capitalization of the individual affiliates as they continue to rebuild their capital bases from weak underwriting performance associated with the 1997-2001 accident years. Thus, their ratings could be negatively affected over the next 12 months if net carried loss reserves prove to be inadequate or if underwriting or operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. becomes elevated. The downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. of Medical Protective's rating primarily reflects a weakened risk-adjusted capitalization, precipitated by continued strong net premium growth and further reserve strengthening in 2003, primarily from 1999-2000 accident years. Notwithstanding, the rating reflects Medical Protective's leading market presence, distribution capabilities and aggressive claims philosophy, historically strong pre-tax earnings supported by a stable and substantial level of invested asset base and improved accident year results highlighted by positive operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . To strengthen its risk-adjusted capitalization, the company has entered into a 25% quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). agreement in 2004 to manage growth. Furthermore, Medical Protective's capitalization is supported by an aggregate stop-loss protection from its affiliate, Employers Reinsurance Corporation, through accident year 2003, which will serve to manage any unforeseen deterioration in the 2001 through 2003 accident years. A.M. Best expects that Medical Protective will build capital organically as it maintains fundamental profitability through underwriting discipline and stable investment returns. The financial strength rating of A (Excellent) has been affirmed with a stable outlook for Employers Re Corp Group, which is comprised of the following affiliates: -- Employers Reinsurance Corporation -- GE Reinsurance Corporation -- First Specialty Insurance Corporation The financial strength rating of A (Excellent) has been affirmed with a stable outlook for Westport Insurance Corporation. The financial strength rating has been downgraded to A- (Excellent) from A (Excellent) with a revised outlook of stable for Medical Protective Company. For current Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , independent data and analysis on more than 470 reinsurance companies, please visit http://www.ambest.com/reinsurance/. 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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