A.M. Best Assigns Debt Ratings to Commerce Group, Inc.'s Senior Notes; Affirms Financial Strength Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 9, 2003 A.M. Best Co. has assigned a senior debt rating of "a-" to The Commerce Group, Inc. (NYSE NYSE See: New York Stock Exchange : CGI CGI in full Common Gateway Interface. Specification by which a Web server passes data between itself and an application program. Typically, a Web user will make a request of the Web server, which in turn passes the request to a CGI application program. ) (Webster, MA) issuance of $300 million 5.95% of 10-year senior notes due 2013. Concurrently, A.M. Best 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+ (Superior) of Commerce Insurance Company and Citation Citation (foaled 1945) U.S. Thoroughbred racehorse. In four seasons he won 32 of 45 races, finished second in ten, and third in two. He won the 1948 Triple Crown, and became the first horse to win $1 million. He set a world record in 1950 by running a mile in 1:33 3/5. Insurance Company (MA) (both located in Massachusetts). Additionally, A.M. Best has affirmed the financial strength ratings of A (Excellent) of Commerce West Insurance Company (California) and American Commerce Insurance Company (Ohio). (See list below.) All rating outlooks are stable, except for American Commerce, which has a negative one. The proceeds of the offering will be used to fund ongoing insurance operations and anticipated future growth. The ratings reflect The Commerce Group's strong capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , historically excellent operating results and leadership position in the Massachusetts automobile market. As the leading writer of personal lines business in Massachusetts, The Commerce Group benefits from its brand name recognition, extensive 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. database and in-depth understanding of the marketplace. Furthermore, Commerce West and American Commerce provide Commerce Group with diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. , reinforcing its strategy to grow and expand outside of Massachusetts. Somewhat offsetting these positive rating factors is the limited product scope as business is conducted predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. in the highly regulated Massachusetts personal auto market and the ongoing susceptibility susceptibility the state of being susceptible. Refers usually to infectious disease but may be to physical factors such as wetting or to psychological factors such as harassment. to weather-related losses. In addition, as a result of the debt offering, financial leverage has increased significantly, and fixed charge coverage has declined. A.M. Best believes continued strong earnings will be necessary for debt service and to maintain fixed charge coverage that is within the acceptable range for the current ratings. The following debt rating has been assigned: The Commerce Group, Inc.-- -- "a-" on the issuance of $300 million 5.95% of senior notes, due 2013 The financial strength ratings of A+ (Superior) have been affirmed for the Commerce Group Inc. and its following members: -- Commerce Insurance Company -- Citation Insurance Company (MA) The financial strength ratings of A (Excellent) have been affirmed for the following members of the Commerce Group Inc.: -- Commerce West Insurance Company -- American Commerce Insurance Company For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/ratings/debtrating/companies.html. 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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