A.M. Best Downgrades Rating of Crusader.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 3, 2002 A.M. Best Co. has downgraded the financial strength rating to B+ (Very Good) from A- (Excellent) of Crusader Insurance Company (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 : UNAM) (Woodland Hills, CA). The outlook is negative. This rating action follows an August 13, 2002, decision to place the rating under review with negative implications, pending successful capital raising and/or 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. initiatives that would enhance capital. At that time, A.M. Best indicated it would monitor Crusader's progress in the near term and expected these capital enhancement initiatives to be completed by the end of the third quarter of 2002. Also, this rating decision follows Crusader's second quarter public earnings announcement that it incurred a reserve charge of approximately $6 million related to liquor liability and premises liability claims in 2001 and prior accident years on business outside of California. The capital raising initiatives were imperative to support the company's eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. capital base due to numerous reserve charges in the last three years. This rating action reflects Crusader's failure to successfully complete capital raising and/or reinsurance initiatives by the prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). timeframe. Furthermore, Crusader's decline in operating performance and the negative impact on capitalization does not support an Excellent rating. In an effort to stabilize and improve operating performance, management has taken corrective actions 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 on problematic classes of business. While continuing its normal operations Generally and collectively, the broad functions that a combatant commander undertakes when assigned responsibility for a given geographic or functional area. Except as otherwise qualified in certain unified command plan paragraphs that relate to particular commands, "normal operations" of and sales, Crusader is instituting a more stringent underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. criteria, limiting coverages offered, placing moratoriums on certain types of new business, increasing rates and non-renewing certain types of business. Moreover, Crusader will not expand into additional programs or territories until it has improved its operating performance. Nevertheless, A.M. Best remains concerned with the potential for further adverse loss reserve development and the negative impact it would have on the company's operating performance and overall capitalization. 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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