A.M. Best Downgrades Rating of APCapital Group.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 6, 2003 A.M. Best Co. has downgraded the financial strength rating to B++ (Very Good) from A- (Excellent) of APCapital Group, a subsidiary of American Physicians Capital, Inc., (Nasdaq:ACAP (Application Configuration Access Protocol) A protocol for storing configuration information in a central server. It is designed to enhance e-mail functions for remote users by providing a central location for personal address books and client application ). Both companies are located in East Lansing East Lansing, city (1990 pop. 50,677), Ingham co., S central Mich., a suburb of Lansing, on the Red Cedar River; inc. 1907. The city was first known as College Park, but was renamed when it was incorporated. , Mich. A.M. Best has placed the group's rating under review with negative implications pending A.M. Best's full review of the group's 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. , loss reserve adequacy and operating structure. This rating action follows today's announcement that APCapital expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. a significant third quarter operating loss 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. due to loss reserve strengthenings of an estimated $43 million before taxes ($28 million net of tax) and the impact of an estimated non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of approximately $50 million to establish a valuation allowance to eliminate the deferred tax asset. Additionally, the group announced its intention to exit the health care and 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 lines and that the Board of Directors is exploring options to maximize shareholder value. The rating of APCapital reflects its reduced capitalization following the announced operating loss and the negative impact on financial flexibility related to the adverse development of loss reserves, which has contributed to significant operating losses reported since year-end 2001. Furthermore, A.M. Best believes that there is uncertainty regarding the potential impact of earnings drag due to the run-off of several business lines. However, APCapital's financial flexibility is somewhat improved due to the access to cash at the ultimate parent company, APCapital Inc., as well as management's aggressive actions to shed underperforming business lines. A.M. Best expects to meet with management during the fourth quarter of 2003 to reassess reassess Verb to reconsider the value or importance of reassessment n Verb 1. reassess - revise or renew one's assessment reevaluate APCapital's loss reserve position, its exit strategy from non-core markets, and holding company capital management intentions. After assessing the impact of management's initiatives on the prospective capitalization and operating position of the group, A.M. Best expects to resolve the under review status of the rating by the end of calendar year 2003. The financial strength rating has been downgraded to B++ (Very Good) from A- (Excellent) for APCapital Group and the following members: -- American Physicians Assurance Corporation -- APSpecialty Insurance Corporation -- Insurance Corporation of America 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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