A.M. Best Downgrades Rating of Lifeguard Inc. and Its Subsidiary.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 5, 2002 A.M. Best Co. has downgraded the financial strength rating to C+ (Marginal) from B+ (Very Good) of Lifeguard, Inc. (San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , CA) and its subsidiary, Lifeguard Insurance Company, with a negative outlook. Both companies have been removed from under review. This rating action was driven by Lifeguard's large operating losses 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. in 2001, resulting in a much weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. capital position. This poor
performance reflected rising loss ratios and increased utilization in
the company's large case book of business primarily written on one
account, which accounted for approximately 15% of the membership.
Lifeguard no longer underwrites this account.
Lifeguard's plan is currently $11.5 million below the required level of capital for the State of California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . Moreover, A.M. Best notes Lifeguard lacks financial flexibility due to its not-for-profit Not-for-profit An organization established for charitable, humanitarian, or educational purposes that is exempt from some taxes and in which no one in profits or losses. , public-benefit corporation status, which limits its ability to raise funds in financial markets. On August 19, 2002, Lifeguard terminated its proposed affiliation with California Physicians Service (d/b/a BlueShield of California). 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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