A.M. Best Downgrades Unionamerica to B+.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 27, 2000 A.M. Best Co. has downgraded the financial strength rating of Unionamerica Insurance Company Limited, London to B+ (Very Good) from A (Excellent) and removed the rating from under review. The rating action follows the announcement made on September 19, 2000 by Unionamerica's new parent, The St. Paul St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery Companies, that Unionamerica would be placed into run-off with effect from January 1, 2001. This decision was based on a strategic review undertaken by St. Paul of Unionamerica's operations after its acquisition in April 2000 of the MMI (Man Machine Interface) See HMI. 1. MMI - Man-Machine Interface. 2. (company) MMI - The company which developed the first Programmable Array Logic devices. MMI was bought by AMD. Companies, of which Unionamerica was a member. Unionamerica was not considered by St. Paul to be a key component of the acquisition. The rating reflects Unionamerica's status as a run-off entity and its lack of future revenue streams, offset by the commitment shown by its parent to support an orderly orderly /or·der·ly/ (or´der-le) an attendant in a hospital who works under the direction of a nurse. or·der·ly n. An attendant in a hospital. run-off of its liabilities. Over the last year, Unionamerica recorded significant deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in prior-year loss reserves, virtually all of which was in respect of 1995 and subsequent 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. years. This required reserve strengthening of 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. 81.2 million in 1999 and USD 24.4 million in 2000. St. Paul support includes a stop loss 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. arrangement, underwritten by St. Paul Fire & Marine Insurance Company, with effect from July 1, 2000. This arrangement protects the company against any underwriting losses, including losses arising from prior-year loss reserve development, during the term of the contract. This is a continuous contract with each party retaining the right to terminate the contract with 90 days prior notice, but with a minimum term of 12 months. St. Paul also has provided the company with a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility for USD 10 million to support its future liquidity position. Based on the strong support shown by St. Paul, A.M. Best believes that an orderly run-off of Unionamerica's liabilities is achievable. However, this opinion, and consequently the company's rating, are predicated on the maintenance of the stop loss reinsurance contract. A.M. Best will continue to monitor the run-off of Unionamerica's portfolio through regular meetings with senior management, which will focus on the key issues of reserving adequacy, cashflow and balance sheet liquidity. 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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