A.M. Best Comments That the Rating of Universal Underwriters Group Is Unchanged Following Sale; Downgrades Rating of UULIC.OLDWICK, N.J. -- A.M. Best Co. has announced that the financial strength rating of A (Excellent) of Universal Underwriters Insurance Company (Overland Park Overland Park, city (1990 pop. 111,790), Johnson co., NE Kans., a residential suburb of Kansas City; inc. 1960. There is printing and publishing, and the manufacture of apparel, aircraft parts, cement, prepared foods, salt, chemicals, marine accessories, and signs. , KS) and its wholly-owned subsidiary, Universal Underwriters of Texas Insurance Company (Plano, TX), remains unchanged following the announcement by Zurich Financial Services Zurich Financial Services Group is a major financial services group based in Zurich, Switzerland. Global operations North America The US consumer market is served primarily by Farmers Insurance Group the third largest personal lines property & casualty insurance of its intent to sell these two property/casualty insurers, as well as Universal Underwriters Life Insurance Company (UULIC) (Overland Park, KS), to an investor group led by private equity firm Hellman & Friedman LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . A.M Best has downgraded the rating of UULIC to A- (Excellent) from A (Excellent). The outlook for all ratings is stable. A.M. Best has reviewed the proposed transaction details, including the use of a moderate amount of debt to fund the acquisition. While the amount of financial leverage anticipated is at the upper end of the acceptable range for similarly rated insurers, debt service requirements from the insurance subsidiaries are anticipated to be reasonable. Furthermore, the Universal Underwriters Group, which is a market leader in the automotive aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. and dealership industries, will continue to be managed by the same team of executives with infrastructure that has been in place for many years. It is anticipated that the property/casualty companies will be depooled at the time of the transaction with all liabilities and supporting assets previously ceded to Zurich American Insurance Company returned to Universal Underwriters Group. Since the start of 2002, the property/casualty companies have ceded all net business, after third-party 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. , to Zurich American Insurance Company. The downgrading downgrading A reduction in the quality rating of a security issue, generally a bond. A downgrading may occur for various reasons including a period of losses, or increased debt service required by restructuring a firm's capital to include more debt and less of the rating of UULIC reflects the anticipated decline in its surplus as a result of an extraordinary dividend related to the transaction, its declining premium levels and limited business profile. In addition, reported earnings will be reduced as a result of the lower level of invested assets and limited growth in premium income. A.M. Best believes that despite the lower capital level, UULIC will remain adequately capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. and will continue to contribute to the Universal Underwriters Group in its role as the provider of credit life and credit disability products. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. 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 http://www.ambest.com. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion