A.M. Best Downgrades Rating of the Underwriter Insurance Company Limited.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--April 8, 2003 A.M. Best Co. has downgraded the financial strength rating to B++ (Very Good) from A- (Excellent) of the Underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. Insurance Company Limited (TU), United Kingdom. The rating has been removed from under review with negative implications, where it was placed on March 10, 2003. A negative outlook has been assigned. This rating action reflects the company's substantial deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in risk-based capital and weak operating performance in 2002, and the challenges associated with the revised strategy recently introduced following a change in management. Deterioration in risk-based capital--TU's risk-adjusted capital position, based on A.M. Best's capital model, has fallen below the "Excellent" level. In the near term, capital restoration to previous levels is unlikely to be generated through retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . Weak operating performance--The 2002 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. of GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 21.3 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 32.0 million) was substantially worse than anticipated and followed the GBP 12.4 million (USD 18.6 million) loss in 2001. Higher expenses, poor claims experience and further reserve strengthening contributed to this deterioration. A return to profitability will depend on management's success in executing its revised business plan. Revised strategy--Management is introducing a wide range of measures to restructure the composition and risk profile of the portfolio, reduce expenses and enhance 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. controls. A.M. Best views as positive the steps taken to date and will continue its discussions with management to assess the impact of these measures on the company's prospective operating performance and business profile. The stabilisation of the rating in the near term is subject to an effective implementation of these corrective measures and the maintenance of, at least, the current capital base. 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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