A.M. Best Assigns "A" -- Excellent -- to Amoco Captive, Northern Resources Assurance.OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 6, 1998--A.M. Best Co. has assigned an "A" (Excellent) rating to Northern Resources Assurance Inc., Chicago. The rating reflects the financial strength of the company and its parent, Amoco Corp., and Northern Resources' very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. 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 since its inception. The company has written a very conservative amount of business over the last five years and has a significant capital base with nearly $500 million in policyholders surplus. The company accepts insurance risks only from Amoco and its affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. , whose loss exposures are typically low-frequency, high-severity and are mitigated by the 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 provided by a group of high-quality international reinsurance companies. Management has demonstrated an underwriting expertise and loss control as evidenced by an average loss ratio of 8% over the past five years. Northern Resources has outperformed the insurance industry in virtually all areas of financial performance measured by A. M. Best. These positive factors are offset by the fact that, when utilizing traditional liquidity tests, Northern's liquidity is artificially lowered, because the majority of the company's assets consist of a demand note to the parent company. However, the note requires immediate payment; when this is taken into consideration, the company is more than capable of paying all liabilities within a reasonable period. It is also noteworthy that reviews of loss reserves--the major component of the company's liabilities--indicate significant redundancies. This rating assignment continues A.M. Best's expanded coverage of alternative-market companies. Over 700 captives are domiciled dom·i·cile n. 1. A residence; a home. 2. One's legal residence. v. dom·i·ciled, dom·i·cil·ing, dom·i·ciles v.tr. 1. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , of which A.M. Best rates 115, or about 16%. They include single-parent captives, risk-retention groups and group/association captives, and their ratings range from "A+" (Superior) to "F" (In Liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy ). A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
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