A.M. Best Assigns Indicative Ratings to Fund American Under White Mountains' Shelf Registration.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 18, 2002 A.M. Best Co. has assigned indicative ratings of "bbb" 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". , "bbb-" preferred securities and "bb+" 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 Fund American Companies, Inc.'s under White Mountains Insurance Group White Mountains Insurance Group is a holding company with business interests in property and casualty insurance, and reinsurance. The group owns the direct marketing insurer Esurance. External links
See: New York Stock Exchange : WTM WTM World Travel Market (London) WTM World Tamil Movement WTM What's the Matter? WTM Windows Task Manager WTM Web, Trattamenti e Materiali (Italian) WTM Winner Takes Most WTM Wind Tunnel Model ) Bermuda, existing $1 billion universal shelf registration. White Mountains unconditionally guarantees the securities issued under the shelf by Fund American, which is the downstream U.S. holding company of White Mountains U.S. domiciled insurance operations. The indicative ratings reflect the prudent capital structure of Fund American following the $2.1 billion acquisition of OneBeacon Insurance Group OneBeacon Insurance Group offers a range of specialty and segmented commercial and personal insurance products sold primarily through select independent agents. As one of the oldest property and casualty insurers in the United States, OneBeacon traces its roots to 1831 and (formerly CGU CGU Conditions Générales d'Utilisation (French) CGU Claremont Graduate University (Claremont, CA) CGU Chang Gung University (Taiwan) CGU Canadian Geophysical Union Insurance Group) and several other insurance entities over the past few years. Additionally, the ratings reflect the considerable insurance industry experience of the company's management team and the group's access to capital, either through the traditional debt and equity markets or private investors. Traditional investor pressure for quarterly earnings is expected to be muted due to the closely held nature of this public company by investors with a long-term viewpoint. As a result, management will have some latitude in maintaining a disciplined balance sheet and pursuing its operating strategy. Financial leverage at Fund American stands at a somewhat moderate 26%, which recognizes over $600 million of deferred credits (negative goodwill) in shareholders' equity. Cash and short-term investments at holding company levels provide sufficient coverage of amortization, interest and somewhat discretionary preferred and common dividends. Management intends to upstream dividends out of earnings from OneBeacon in 2002 and beyond. However, should earnings fall short of projections, sizable unassigned surplus provides for dividend capacity sufficient to cover cash requirements without seeking regulatory approvals. The group's operating strategy incorporates pricing to produce an operating profit, a disciplined balance sheet and the willingness to forego market share and revenue where inadequate pricing is not obtainable. Nevertheless, there is significant execution risk in achieving these operating fundamentals. The group has commenced exiting unprofitable business segments, increased loss reserves, added 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, restructured the investment portfolio and retooled its management team. Nonetheless, these efforts have yet to be reflected in the group's operating performance. For a list of debt and financial strength ratings for the White Mountains group, please visit: http://isg2001/press/whitemountains.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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