A.M. Best Downgrades Ceres Group Subsidiaries.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 16, 2001 A.M. Best Co. has downgraded the financial strength ratings of the primary insurance subsidiaries of the Ceres Group, Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. , (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CERG CERG Competitive Earmarked Research Grant CERG Commander Emergency Recovery Group ). The ratings of Continental General Insurance Company and Pyramid Life Insurance Company have been downgraded from A- (Excellent) to B+ (Very Good), along with, Central Reserve Life Insurance Company which has been downgraded from B+ (Very Good) to B (Fair), all with negative outlooks. The group's major medical business, the majority of which is written through Central Reserve Life, continues to generate losses. In the first half of 2001, these deficits resulted in significant deterioration in Central Reserve's surplus base. A large portion of these losses can be traced to a joint 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. transaction with the Hannover Life Reassurance Company of America involving the health business of United Benefit Life Insurance Company (UBL (Universal Business Language) A format for exchanging data from one XML business language to another. Based on ebXML Core Components, UBL is designed to provide a common language that acts as an intermediate vocabulary so that one XML vocabulary can interoperate with ) in 1998 and the subsequent acquisition of UBL by Central Reserve through foreclosure in 1999. As a result of these losses, the company has taken action to terminate and replace all the UBL business. It is also taking corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or to on other under-performing blocks of major medical business. Due to these losses and its need to raise capital, Central Reserve's rating is now considered vulnerable by A.M. Best. Additionally, the major medical losses of CRL CRL - Carnegie Representation Language. Carnegie Group, Inc. Frame language derived from SRL. Written in Common LISP. Used in the product Knowledge Craft. and its United Benefit subsidiary have impacted Ceres' ability to contribute capital to its core senior health insurance operations. In particular, Continental General, which has been writing a considerable amount of Medicare supplement business recently, will need additional capital to support continued premium growth. The downgrades reflect the need to raise additional capital in the coming months, the continued operatingweakness in the group's major medical business and Ceres' concentrated health insurance profile. The negative outlooks on all three companies will remain in place until Ceres has raised an appropriate amount of capital. 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. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion