A.M. Best Places Superior National's "B+" Rating Under Review with Negative Implications.OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 10, 1997--Effective immediately, A.M. Best Co. has placed the "B+" (Very Good) secure rating of Superior National Insurance Co. under review with negative implications. This action follows Superior National's recent announcement that it will renew and administer a potentially significant amount of 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. premiums currently written by Golden Eagle Insurance Co. This transaction is integral to the California Department of Insurance's plan to rehabilitate re·ha·bil·i·tate v. 1. To restore to good health or useful life, as through therapy and education. 2. To restore to good condition, operation, or capacity. Golden Eagle, which was placed under conservatorship Conservatorship A circumstance in which the court declares an individual unable to take care of legal matters and appoints another individual, known as a conservator, to do so. Notes: This is sometimes referred to as "LPS Conservatorship. on Jan. 31, 1997. The rating action reflects the uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. Superior's ability to adequately support the substantial new business volume expected from the Golden Eagle transaction. This volume is expected to be combined with another large block of business from Superior's pending acquisition of the Pacific Rim Pacific Rim, term used to describe the nations bordering the Pacific Ocean and the island countries situated in it. In the post–World War II era, the Pacific Rim has become an increasingly important and interconnected economic region. Insurance Co. A.M. Best generally takes a pessimistic pes·si·mism n. 1. A tendency to stress the negative or unfavorable or to take the gloomiest possible view: "We have seen too much defeatism, too much pessimism, too much of a negative approach" view of a company's rating when a transaction appears to put the company under an operational and financial strain -- particularly when a transaction involves business that is very competitive and has questionable rate adequacy. These are our primary concerns for Superior National's rating. Superior worked with the California Department of Insurance The California Department of Insurance (CDI), established in 1868, is the angency charged with overseeing the regulation of insurance regulations, enforcing statutes mandating consumer protections, educating consumers, and fostering the stability of insurance markets in the state only one week before announcing a transaction to assemble a management team to oversee Golden Eagle's workers' compensation operations and to re-underwrite and renew attractive workers' compensation business within Superior National. A.M. Best will meet with management soon to review the details of the transaction and the company's ability to comfortably address the dual challenges of merging Pacific Rim into its operations, along with managing Golden Eagle and renewing a portion of its business. A.M. Best recognizes that Superior National will benefit from the improved scale of its operations, greater operating efficiencies, as well as the opportunity to leverage its advanced computer systems. The review will focus on Superior National's ability to selectively underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. and effectively administer the new business. Superior National Insurance Group Inc., the company's parent, will support the new Golden Eagle business through the issuance of up to $65 million in common stock. In addition, Superior National will not be assuming any financial responsibility for any Golden Eagle business written before April 1, 1997. The rating will remain under review pending the completion of the transactions and A.M. Best's review of Superior National's operating and financing plans. The Golden Eagle transaction is subject to numerous conditions that must be met before the plan is approved. It requires the performance of a due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. review, completion of definitive documentation and regulatory and judicial approvals and consents. As a result, implementation of the plan could take several months. The Pacific Rim transaction is subject to shareholder and regulatory approval. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. CONTACT: A.M. Best Co. Jeffrey Dunsavage, 908/439-2200, ext. 5618 http://www.ambest.com |
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