A.M. Best Lowers Rating of Legion Insurance Group.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 26, 2000 A.M. Best Co. has lowered the financial strength rating of the three members of the Legion legion, large unit of the Roman army. It came into prominence c.400 B.C. It originally consisted of 3,000 to 4,000 men drawn into eight ranks: the first six ranks, called hoplites, were heavily armed, while the last two, called velites, were only lightly armed. Insurance Group--Legion Insurance Co., Legion Indemnity Co. and Villanova Insurance Co.--to A- (Excellent) from A (Excellent). This rating action also applies to the five members of the I.P.C. Group. Legion Insurance Group and I.P.C. Group are core insurance subsidiaries of Mutual Risk Management, Ltd. (NYSE NYSE See: New York Stock Exchange :MM), providing policy issuance and rent-a-captive facilities, respectively, to mid-sized U.S corporations and associations. A. M. Best has long-term concerns regarding Legion's exposure to a high level of 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. recoverables, operational strain caused by rapid growth in program business over the past few years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time ongoing need to augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: capital in support of rapid growth and reduced cash flow stemming from disputed reinsurance recoverables. These issues, in concert with A.M. Best's view of Mutual Risk Management's tightened financial flexibility, have resulted in this rating action. Over the past few years, Mutual Risk Management has significantly changed its business mix towards program business in order to offset decline in its core Corporate Account programs. The rapid growth in program business has resulted in significant reinsurance recoverables requiring additional capital and an increase in reinsurance disputes, which negatively affect cash flow. While the current level of disputed reinsurance is manageable, the level of recoverables introduces greater uncertainty requiring capital and cash infusions from Legion's parent--Mutual Risk Management. In addition, the rapid program growth has revealed deficient de·fi·cient adj. 1. Lacking an essential quality or element. 2. Inadequate in amount or degree; insufficient. deficient a state of being in deficit. operating and risk management controls, resulting in a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in 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. performance and heightened focus on reserve adequacy. Mutual Risk Management and its subsidiaries have historically reported superior underwriting results and operating returns, a stable balance sheet and have maintained a leadership position in the alternative risk market. In part, the stability emanated from an intact, competent management team. In addition, Mutual Risk Management has maintained a conservative business posture, a positive cash flow, operational stability and financial flexibility through access to the capital markets. A.M. Best recognizes that management has implemented a number of initiatives designed to alleviate operational, cash and capital strain in the near-term. However, A.M. Best believes financial flexibility is now somewhat constricted con·strict v. con·strict·ed, con·strict·ing, con·stricts v.tr. 1. To make smaller or narrower by binding or squeezing. 2. To squeeze or compress. 3. which, coupled with operational issues and potential capital needs over the long-term, has increased uncertainty. A.M. Best's A- rating assignment reflects our expectation that Mutual Risk Management will take the appropriate steps necessary to address capital and cash flow issues in the near-term. 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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