A.M. Best Assigns National Consumer Insurance Co. "E" Rating Following State Action.OLDWICK, N.J.--(BUSINESS WIRE)--June 4, 1998--A.M. Best Co. today assigned a rating of "E" (Under Regulatory Supervision) to National Consumer Insurance Co., a member of the Robert Plan Corp. The company previously was designated "NR-2", indicating that it was not rated due to insufficient operating experience. The action follows yesterday's release by the New Jersey Department of Banking and Insurance of an administrative supervision order that placed the Edison, N.J.-based company under regulatory supervision. NCIC NCIC National Crime Information Center NCIC National Cancer Institute of Canada NCIC North Carolina Industrial Commission NCIC National Cartographic Information Center NCIC National Cancer Information Center (American Cancer Society) will cease issuing personal auto policies on June 4 and will not renew certain policies expiring Sept. 1 and thereafter. It will seek replacement carriers for its business over the next year. At the end of that period, it may apply for permission to continue renewing existing policies. If neither has occurred, agency contracts or servicing contracts to certain NCIC agents will be offered by two Robert Plan affiliates, GSA (1) (Global mobile Suppliers Association, Sawbridgeworth, U.K., www.gsacom.com) A membership organization of suppliers of GSM products and services. Its goal is to promote GSM as the worldwide mobile communications standard. See GSM Association and GSM. Insurance Co. and Newark Insurance Co. The order also stipulates that a financial guarantee be provided by the Robert Plan as NCIC's ultimate parent through Eagle Insurance Co., its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. and immediate parent of NCIC, for the maintenance of minimum 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. and loss-reserve adequacy. Between year-end 1992 and August 1996, NCIC administered the New Jersey Voluntary Personal Auto Pool, and nearly all of the very unprofitable business was reinsured with participating pool members. Late in 1996, the pool was dissolved dis·solve v. dis·solved, dis·solv·ing, dis·solves v.tr. 1. To cause to pass into solution: dissolve salt in water. 2. as a result of a buyout Buyout The purchase of a company or a controlling interest of a corporation's shares. Notes: A leveraged buyout is accomplished with borrowed money or by issuing more stock. plan approved by New Jersey regulators, whereby the members terminated and transferred their pool obligations to NCIC by paying the company a buyout fee. Substantial operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. quickly drained NCIC's up-front fees and surplus, which has plummeted by 44% over the past 12 months, and prompted yesterday's regulatory action. NCIC's difficulties and other financial issues related to the Robert Plan have implications for the Robert Plan's other insurance subsidiaries. A.M. Best will soon conclude its evaluation of these issues and their rating impact. 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.
CONTACT: Jeffrey Dunsavage
(908) 439-2200, ext. 5618
dunsavj@ambest.com
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