A.M. Best Takes Further Rating Actions on ULLICO.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 7, 2003 A.M. Best Co. has lowered the financial strength ratings to B- (Fair) from B (Fair) of ULLICO ULLICO Union Labor Life Insurance Company Inc.'s (Wilmington, DE) life/health subsidiaries, Union Labor Life Insurance Company The Union Labor Life Insurance Company (ULLICO) is a privately held life and health insurance company in the United States. ULLICO was founded in 1925 by the American Federation of Labor (AFL), which wanted to offer working people affordable health and life insurance. (Baltimore, MD) and its wholly-owned subsidiary, ULLICO Life Insurance Company (Austin, TX). Also, the financial strength rating of the property/casualty subsidiaries, Ulico Insurance Group (UIG UIG Uighur (ISO language code, aka UG) UIG Utility Industry Group UIG Universal Industrial Gases, Inc. (Easton, PA) UIG Underground Injection Control UIG User Information Group ) (Wilmington, DE), which includes two inter-company pooling members, Ulico Casualty Company (Delaware) and its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Ulico Indemnity Company (Arkansas), has been downgraded to B (Fair) from B++ (Very Good). The stand-alone financial strength rating of Ulico Standard of America Casualty Co (California) has been lowered to B- (Fair) from B (Fair). All of the ratings continue to have negative outlooks. These rating actions are in response to the reduced level of Union Labor Life's final 2002 year-end statutory and surplus position, which was less than A.M. Best's expectations. A.M. Best remains concerned about the 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. , liquidity, asset concentration and invested asset quality at both Union Labor Life and the parent holding company, as well as the limited financial flexibility of ULLICO, Inc. While UIG maintains adequate capitalization, its rating has been lowered further due to its unfavorable operating results, which were below management's year-end financial indications. Current operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before are being weighed down by losses in its core lines of business, fiduciary liability and commercial lines, with adverse reserve development resulting from increased claims frequency, as evidenced by the further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in its returns on revenue at year-end 2002. Additionally, the significant growth in gross written premium volume during the year compounded by the decline in policyholders' surplus due to negative operating earnings has resulted in elevated gross and net leverage measures. A.M. Best notes that the assets held in the separate accounts of Union Labor Life, including separate account J, are insulated in·su·late tr.v. in·su·lat·ed, in·su·lat·ing, in·su·lates 1. To cause to be in a detached or isolated position. See Synonyms at isolate. 2. from all liabilities of the company by contract and by law. Taking into account the ongoing concerns within the organization, A.M. Best is no longer comfortable maintaining a secure rating within the group. A.M. Best will continue to monitor the operating companies' situation. 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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