A.M. Best Places Ratings of Atlantic Mutual Companies Under Review with Negative Implications.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 6, 2003 A.M. Best Co. has placed the financial strength rating of A- (Excellent) of the Atlantic Mutual Companies (The Atlantic) (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ) under review with negative implications. Concurrently, A.M. Best has placed the "bbb" debt rating of Atlantic Mutual Insurance Company's existing $100 million 8.15% surplus notes, due February 2028 under review with negative implications. This action reflects A.M. Best's heightened concerns regarding The Atlantic's 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. and the quality of earnings and surplus, in view of its weak 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. and operating performance and its use 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. transactions to bolster This article is about the pillow called a bolster. For other meanings of the word "bolster", see bolster (disambiguation). A bolster (etymology: Middle English, derived from Old English, and before that the Germanic word bulgstraz surplus. Furthermore, the group has somewhat limited financial flexibility and the potential for continued adverse prior year loss reserve development. Management is pursuing various capital raising alternatives designed to replace soft capital with permanent funds and enhance the quality of surplus and earnings. A.M. Best views the timely execution of this plan as critical. In the event that The Atlantic is unsuccessful, the ratings are likely to be downgraded. In 2002, The Atlantic purchased an adverse development cover, which allowed the group to increase prior year loss reserves by $86 million and take the benefit of $68.5 million in discounted 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. and general liability reserves. The Atlantic utilizes quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). and aggregate stop loss reinsurance, which has enabled it to effectively reduce net premium in 2002 and enhance net underwriting results in 1999 and 2000. However, all of these reinsurance agreements included funds held interest expenses and aggregate liability limits. While A.M. Best recognizes the immediate visual benefits gained from these reinsurance transactions, in A.M. Best's opinion, these reinsurance covers provide temporary surplus relief and will ultimately lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. future earnings. The financial strength rating of A- (Excellent) has been placed under review with negative implications for the Atlantic Mutual Companies and the following members: -- Atlantic Lloyd's Insurance Company of Texas -- Atlantic Mutual Insurance Company -- Atlantic Specialty Insurance Company -- Centennial Insurance Company 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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