A.M. Best Downgrades Rating for PAULA and Removes It From Under Review.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 1, 2002 A.M. Best Co. has downgraded the financial strength rating to D (Poor) from B- (Fair) for PAULA Insurance Company (PAULA), Pasadena, California Pasadena is a city in Los Angeles County, California, United States. As of the 2000 census, the city population was 133,936 and the 160th largest city in the United States. The California Finance Department estimates the Pasadena population to be 146,166 in 2005. , a subsidiary of PAULA Financial (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 : PFCO), and removed it from under review. The rating had been under review since March 9, 2001, due to uncertainty regarding the company's recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. plans following a series of significant year-end reserve charges and the resulting deterioration in policyholder surplus. The downgrade follows the February 28, 2002, announcement by PAULA Financial that PAULA will post a reserve charge of $37 million in the fourth quarter of 2001, causing the company's Risk Based Capital to fall into the "Mandatory Control Level". Prior to filing its year-end 2001 statements, PAULA Financial was unable to attract new capital to boost PAULA's impaired surplus position. As a result, PAULA will voluntarily cease underwriting workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. business effective immediately. For the time being, PAULA Financial will administer the claims settlement runoff Runoff The procedure of printing the end-of-day prices for every stock on an exchange onto ticker tape. Notes: If the "tape is late" then it can take a long time to print off all the closing prices. of the company. 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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