A.M. Best Upgrades and Affirms Ratings of Ceres Group Subsidiaries.Business EditorsOLDWICK, N.J.--(BUSINESS WIRE)--March 22, 2004 A.M. Best Co. has upgraded the financial strength rating to B+ (Very Good) from B (Fair) of Central Reserve Life Insurance Company (Central Reserve) (Ohio) and affirmed the financial strength rating of B+ (Very Good) of Continental General Insurance Company (Continental General) (Nebraska), primary insurance subsidiaries of the Ceres Group Inc (Ceres) (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CERG CERG Competitive Earmarked Research Grant CERG Commander Emergency Recovery Group ) (Cleveland, OH). The rating outlooks are stable. These rating actions reflect both Central Reserve's and Continental General's notable improvement in earnings and capitalization. These ratings also incorporate Ceres' strengthened balance sheet position, which was positively affected by the sale of Pyramid Life Insurance Company (Pyramid Life) (Kansas). Partially offsetting these strengths are considerable exposure to the volatile health insurance market, uncertainties related to Central Reserve's planned expansion into Medicare Supplement--scheduled to commence in 2004--and limited financial flexibility at the holding company. The earnings of Central Reserve have greatly improved in the last two years, and its management has implemented a series of important changes. The company redesigned its product portfolio, enforced stricter 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 pricing standards, reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. claims processing procedures and implemented substantial renewal rate increases. As a result, the company has a smaller volume of business in force but substantially improved profitability. A.M. Best believes that going forward, the major medical segment contribution should decline--both as a function of decreasing in-force certificates and increasing Medicare Supplement business. Continental General's improvement in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was due primarily to the reduction in the major medical loss ratios resulting from its strategy to discontinue writing new business in certain states and focusing on selected products and markets that have been historically profitable. Capitalization at both companies was positively impacted by the improvement in earnings. In addition, Continental General increased its capital by $21 million from the sale of Pyramid Life, which was completed in early 2003. While A.M. Best acknowledges capital at these operating companies operating company A business that engages in transactions with outsiders. is now considered good, the holding company's financial flexibility is limited. For current Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , independent data and analysis on more than 1,050 health companies and more than 130 HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, industry composites, please visit http://www3.ambest.com/health/. 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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