A.M. Best Places Ratings of Vesta Insurance Group Under Review with Negative Implications.Business Editors/Health/Medical Writers OLDWICK, N.J.--(BUSINESS WIRE)--March 15, 2004 A.M. Best Co. has placed the B (Fair) financial strength rating of the property/casualty affiliates of Vesta Insurance Group (NYSE NYSE See: New York Stock Exchange : VTA VTA Valley Transportation Authority (San Jose, California) VTA Ventral Tegmental Area VTA Vacuum Triode Amplifier VTA VFR Terminal Area VTA Martha's Vineyard Transit Authority (Massachusetts) ) (Birmingham, AL) under review with negative implications. Concurrently, A.M. Best has placed the "b-" senior debt and "ccc" deferrable capital securities ratings of Vesta Insurance Group Inc., under review with negative implications. A.M. Best has also placed the B (Fair) financial strength rating of the life insurance subsidiary, American Founders Life Insurance Company, under review with negative implications. These rating actions reflect Vesta's significant deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in capital and on-going uncertainty regarding management's capital enhancement initiatives. The reduction in capital was driven primarily by charges associated with an unfavorable arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the decision along with the write down of a deferred tax asset. Accordingly, statutory surplus for the property/casualty operating companies operating company A business that engages in transactions with outsiders. declined dramatically. In addition, the holding company recorded a considerable loss of more than 50% of stockholders equity. As previously announced, Vesta intends to sell a portion of its non-standard agency and 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. business through an initial public offering. While the public offering of the non-standard auto business may facilitate a more efficient allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of capital, considerable execution risk remains regarding the ultimate success of these initiatives. The ratings will remain under review pending A.M. Best meeting with management as well as execution of the group's capital enhancement initiatives. In the absence of capital improvement, the ratings will likely be downgraded. Vesta also announced that it has entered into a definitive agreement to sell American Founders Financial Corporation, which owns American Founders Life Insurance Company. This rating will remain under review with negative implications, pending A.M. Best meeting with Vesta management as well as the management team of the new owners of American Founders. The B (Fair) financial strength rating has been placed under review with negative implications for the following Vesta Insurance Group property/casualty and life affiliates: -- Vesta Fire Insurance Corporation -- Affirmative AFFIRMATIVE. Averring a fact to be true; that which is opposed to negative. (q.v.) 2. It is a general rule of evidence that the affirmative of the issue must be proved. Bull. N. P. 298 ; Peake, Ev. 2. 3. Insurance Company -- Florida Select Insurance Company -- Hawaiian Insurance & Guarantee Company Ltd. -- Insura Property and Casualty Insurance Company Inc. -- Shelby Casualty Insurance Company -- Shelby Insurance Company -- Texas Select Lloyds Insurance Company -- Vesta Insurance Corporation -- American Founders Life Insurance Company The following debt ratings have been placed under review with negative implications: Vesta Insurance Group, Inc.-- -- "b-" on $100 million 8.75% senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. debentures due 2025 Vesta Capital Trust I-- -- "ccc" on $100 million 8.525% Deferrable Capital Securities due 2027 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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