A.M. Best Affirms Subsidiaries of W.R. Berkley Corporation; Assigns Ratings to Existing Debt.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 30, 2001 A.M. Best Co. has affirmed the financial strength ratings of the subsidiaries of W.R. Berkley Corporation (NYSE NYSE See: New York Stock Exchange :BER (1) (Basic Encoding Rules) A set of encoding rules for ASN.1 notation, which is a method for defining data structures. See ASN.1. (2) (Bit Error Rate) The average number of bits transmitted in error. See BERT. 1. ). Those affirmations include A (Excellent) for Berkley Insurance Group, Berkley Regional Group, Nautilus nautilus, in zoology nautilus, cephalopod mollusk belonging to the sole surviving genus (Nautilus) of a subclass that flourished 200 million years ago, known as the nautiloids. Insurance Group and Carolina Casualty Insurance Company and A+ (Superior) for Admiral Insurance Set up in 1993, Admiral, part of the Admiral Group, is a car insurance specialist mainly targeting those who traditionally pay higher than average premiums, including drivers under 35 and those living in big cities and in Scotland. Group. A.M. Best has also assigned a "bbb" rating to W.R. Berkley Corporation's existing senior debt securities, a rating of "bbb-" for preferred securities issued by W.R. Berkley Capital Trust and indicative ratings to corporate securities under the company's $600 million shelf registration. These indicative ratings include "bbb" on senior debt, "bbb-" on 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". , "bbb-" on trust preferred securities and "bb+" on 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. . The ratings reflect the solid capitalization of the insurance subsidiaries that has supported operating results in recent years below the company's historic level. The ratings also consider W.R. Berkley's refocused 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. and regional operations, cost reduction efforts and reunderwriting activities that have positioned the company to produce favorable future earnings and capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. rate hardening in core segments. W.R. Berkley also benefits from its expertise in specialized businesses, a prudent risk management strategy, a conservative investment portfolio and diversified operations within many segments of the property/casualty industry. These strengths are partially offset by W.R. Berkley's modest operating returns and capital generation in recent years and high net underwriting leverage. 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 in recent years have been negatively impacted by intense competition, adverse loss reserve development in select segments and weather-related losses. Although A.M. Best believes available margins in the group's businesses and the effect of corrective actions will enable W.R. Berkley's earnings to improve, the group faces execution risk to produce sustainable earnings. Future maintenance of the financial strength and debt ratings depends on W.R. Berkley's success in returning to historic profitability and the maintenance of capitalization commensurate with the current rating levels. W.R. Berkley Corporation's financial leverage remains high with debt plus preferred securities to total capital at 41%, albeit at lower levels than prior years. In addition, fixed coverage remains low, although cash at the holding company from a recent common stock offering in 2001 relieves low fixed coverage ratios. Furthermore, A.M. Best believes fixed coverage will improve given favorable future earnings prospects. A.M. Best does not anticipate a significant reduction to financial leverage in the near term, thereby placing greater emphasis on W.R. Berkley's need to generate sustainable earnings. For a complete listing of companies with affected financial strength and debt ratings, please visit http://www.ambest.com/press/berkley.pdf. 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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