A.M. Best Downgrades Ratings of Two AMERCO Life Insurance Subsidiaries.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 16, 2002 A.M. Best Co. has downgraded the financial strength ratings to B++ (Very Good) from A- (Excellent) of Oxford Life Insurance Company (Phoenix, AZ) and its wholly-owned subsidiary, Christian Fidelity Life Insurance Company (Waxahachie, TX). The ratings outlook for both companies is stable. The companies operate as part of the AMERCO Group, a Nevada corporation A Nevada Corporation is a corporation chartered under the laws of the U.S. state of Nevada. Nevada, like the state of Delaware (See Delaware corporation), is well known as a corporate haven. engaged in moving and storage, real estate and insurance in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada through various subsidiaries. Moving and storage activities are concentrated in the operations of U-Haul International, Inc. and AMERCO Real Estate Company. These rating actions reflect Oxford Life's growing percentage in less than investment grade bonds due to downgrades of previously investment grade bonds, declines in surplus, weak operating results and A.M. Best's concerns about the diversification path taken by the company. Over the past several years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time life and health members of AMERCO have reported significant fluctuations in surplus due to higher than usual accident and health claims, realized and unrealized capital losses and several one-time expenses associated with various acquisitions and legal expenses. While the group has historically reported net operating gains, the level of the operating results has fluctuated annually and not been at the level expected for Excellent-rated companies. In the first half of 2002, Oxford Life reported a significant net loss. A considerable portion of the loss resulted from the write-down or sale of a number of less than investment grade fixed income holdings. A.M. Best remains concerned about the group's less than investment grade bond exposures, less liquid real estate, mortgages and alternative investments, which comprise a large portion of its total capital and surplus position. The net decrease in surplus will have a negative impact on AMERCO Group's risk-adjusted capital position. A.M. Best believes Oxford Life faces challenges as it continues to transition from a reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. to a direct writer of fixed rate deferred annuities Deferred annuities Tax-advantaged life insurance products. Deferred annuities offer deferral of taxes with the option of withdrawing one's funds in the form of a life annuity. , Medicare supplement insurance and credit life and disability insurance. Management is in the process of implementing various 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 , which include a series of rate increases, termination of unprofitable accounts and additional means of expanding its revenue base. Moreover, the group's management is contemplating several alternative means to alleviate surplus strain and bolster 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. . These efforts include additional 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. and the potential sale of real estate property, contributed by AMERCO. 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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