A.M. Best Downgrades Ratings of American Physicians Assurance Corp, APSpecialty Insurance Corporation and Insurance Corporation of America.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 29, 2004 A.M. Best Co. has downgraded the financial strength ratings to B+ (Very Good) from B++ (Very Good) of the American Physicians Assurance Corp (APA (All Points Addressable) Refers to an array (bitmapped screen, matrix, etc.) in which all bits or cells can be individually manipulated. APA - Application Portability Architecture ) and APSpecialty Insurance Corporation (APSpecialty). Additionally, A.M. Best has downgraded the financial strength rating to B- (Fair) from B++ (Very Good) of Insurance Corporation of America (ICA Ica (ē`kä), city (1993 pop. 108,724), capital of Ica dept., SW Peru, on the Pan-American Highway. It is a commercial center for the cotton, wool, and wine produced in the region. There are several summer resorts nearby. ). APA, APSpecialty and ICA are wholly-owned subsidiaries of American Physicians Capital Inc. (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 ) (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 : ACAP). All four companies are located in East Lansing, Michigan East Lansing is a city in the U.S. state of Michigan. The city is located directly east of Lansing, Michigan, the state's capital. Most of the city is within Ingham County, though a small portion lies in Clinton County. . The ratings of APA, APSpecialty and ICA will remain under review with negative implications--where they were placed on November 6, 2003--pending A.M. Best's assessment of each company's finalized year-end 2003 capital adequacy, operating structure and holding company financial leverage. These rating actions reflect A.M. Best's revised opinion relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the treatment of APSpecialty and ICA as core affiliates of APA, which had been based on APA's substantial 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. of its affiliates. A.M. Best now views the ratings of APA, APSpecialty and ICA on a stand-alone basis. Accordingly, A.M. Best's group rating methodology no longer applies to any of the members of the former APCapital Group. Thus, A.M. Best has assigned APCapital Group an NR-5 (Not Formally Followed) rating. The rating of APA reflects its significantly reduced risk-adjusted capitalization highlighted by a sizeable decrease of statutory surplus in 2003, poor operating performance and constrained financial flexibility at the holding company, ACAP. Driving the company's decline in surplus in 2003 was a reserve charge of $28 million, net of tax attributed to adverse loss reserve development reported during the third quarter on claims associated with the company's run-off Florida medical liability business, Ohio occurrence claims and Kentucky medical liability claims. The company exited the Florida market in December 2002 and ceased writing Ohio occurrence business in July 2002. The rating of APSpecialty reflects the company's limited business profile and volatile operating performance. Currently, the company has reduced its writings in APSpecialty and expects to deploy capital to the company's core medical liability writings written at its sister company, APA. The rating of ICA reflects the company's marginal capitalization, which was the direct result of the third quarter loss portfolio transfers of all assets and liabilities pertaining to 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 that was previously written at APA and APSpecialty to ICA, and the subsequent dissolution of an intercompany reinsurance agreement with APA. All companies will remain under review until A.M. Best assesses the impact of strategic initiatives that management is contemplating, which include downstreaming additional funds from the holding company and restructuring APSpecialty so that any excess capital can be infused into APA. A.M. Best expects to resolve the under review status of all companies in conjunction with reviewing finalized year-end 2003 statutory results and GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). holding company financials at ACAP. 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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